The Estonian Ministry of Finance is gathering public comments on a new state budget law that would set down the requirement of a balanced general government budget.
Estonia's new state budget law to set down balance requirement
4th July 2013, 17:09
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In the ministry's judgment the Estonian experience has validated the need for a strong fiscal framework and discipline. The reserves accumulated during the economic growth period helped to overcome the crisis and avoid the mounting of debt, spokespeople for the ministry said.
According to the budget rule the structural budget position of the government sector, based on economic projections, has to show a balance at the least.
In case of a major deviation from budget balance the government would have to make proposals for improving the budget position. After adjusting such a deviation the government would have to plan a surplus of at least 0.5 percent of gross domestic product a year until reaching a surplus equal to the deficit of the budget.
Opinions on the fulfillment of and the need to correct the fiscal objectives of the government sector, as well as on the state's macroeconomic and financial forecasts, will be given by the central bank.
The restriction of a net debt burden not exceeding 60 percent of revenue for local governments will remain in force until 2016.
The new State Budget Act is planned to replace the old one that has been in force since 1999 from Jan. 1, 2014.