Budget, Estonia, Financial Services, GDP, Legislation
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Friday, 29.03.2024, 01:16
Estonian Riigikogu adopts 2018 state budget
The budget was passed in the 101-seat chamber in the third and final
reading by votes 55 to 41.
The size of expenditures and investments set out by the budget is 10.58 billion euros and of income 10.33 billion euros. This is the current government's first full-year budget, which expresses the aims of the coalition that took over in November 2016.
Expenditures and investments are bigger by 922 million euros or 9.5% and
income bigger by 986 million euros or 10.6% than this year. The budget is based
on an economic growth estimate of 3.3% and comes with a minus equaling 0.25% of
GDP.
At the proposal of the finance committee, the budget bill was expanded by
increasing regional investments, supporting various third sector and civil
society projects as one-off expenses with 4 million euros. The source to cover
that gap is reducing the government's special-purpose reserve by the same
amount.
During the second reading 50 proposals to amend the bill submitted by MPs
and parliamentary groups, which were not supported by the parliament's finance
committee. The finance committee itself drew up 20 proposals, which for the
most part consisted of a number of technical amendments between and within the
areas of government of ministries as well as clarified and adding paragraphs of
text. Altogether nine proposals were filed for the third reading, four of which
came from the finance committee. The leading committee decided to not take into
account proposals filed by the opposition.
Tax amendments taking effect from next year will raise the basic exemption
for low and medium income earners to 500 euros a month, which means that people
whose gross monthly pay is up to 1,200 euros will be left up to 64 euros more
in their hands per month and the net wage of the lowest paid individuals will
rise by up to 15%. The measure is estimated to cost the state 182 million euros
in 2018.
The government is planning to invest 56.7 million euros in important
infrastructure projects and in developing the living environment of Estonia. In
2018, the construction of a nationwide broadband network in collaboration
between the state, municipalities and the private sector will continue and
construction of the first stage of the Haapsalu railway will begin.
Investments in roads are budgeted to total 227 million euros, which
includes money for the project to transform the Kose-Mao section of the
Tallinn-Tartu highway into a four-lane road, construction of the Juri-Vao
section of Tallinn Ring Road into a 2+2 lane road, construction of Reidi Road
in Tallinn, renovation of the Haabersti road intersection in Tallinn and
construction of an intersection at Vao on the Tallinna-Narva road on the border
of the capital city.
Defense expenditures are estimated to equal 2.11% of GDP in 2018. Spending
for independent defense capability will equal approximately 2% of GDP, to which
investments necessary for hosting NATO allies and costs of the national defense
investment program will be added.
Under the healthcare financing reform, 300 million euros of additional
money will be channeled into the healthcare system over the next five years,
including 34 million euros in 2018, to improve the availability of services.
The state will start making contributions in 2018 to the Health Insurance
Fund on behalf old-age pensioners who are not in employment. This contribution
is planned to gradually rise to 13% of the average old-age pension by 2022. The
Health Insurance Fund meanwhile will take responsibility for some of the
healthcare services previously financed from the state budget.
The payroll of employees of institutions financed from the state budget
will grow by 2.5% and it is up to individual ministries to decide where exactly
and how big pay rises will take place. The payroll will increase more - by 4.5% - in the field of interior security, including for the police, rescuers,
prison and customs officials and social welfare workers.
Pay increases for teachers will continue, for which purpose the budget of
the Ministry of Education and Research will get 36 million euros more than this
year. The size of the budget of a pay increase for cultural workers and sports
coaches working with young people is 10 million euros. A pay increase for
prosecutors aimed at ensuring the competitiveness of their salaries will cost
0.6 million euros a year.
The government decided to reduce the government sector's structural budget
deficit by half compared with what was planned in the national fiscal strategy,
to a near-balance level of 0.25% of GDP.
The budget builds on the four major objectives of the government identified
in the fiscal strategy that the government adopted in spring: to promote
economic growth, to increase the population of Estonia, to strengthen the
security of Estonia, and to increase the welfare and cohesion of the society.