Govt approves principles of Estonia's 2014 state budget

Photo: SCANPIX

The Estonian government at its Cabinet sitting on Thursday approved in principle the draft of the state budget for 2014 showing revenues at 8.0 billion and expenditures at 8.1 billion euros.

The general government's structurally adjusted budget position in 2014 is projected to have a surplus of 0.7 percent of estimated GDP, while in nominal terms the budget comes with a deficit equaling 0.4 percent of GDP.

The state's expenditures will increase by almost 400 million euros or roughly 5.0 percent. The Estonian government sector's expenditures measured as a ratio to GDP are moderate compared with those of other EU member states. In 2012, the ratio was 40.5 percent in Estonia and 49.3 percent in the EU on average.

Bigger social expenditures play a big role in the budget for 2014, as 35 million more than this year will be spent for state pensions and 62 million euros more for medical insurance. One of the goals is to cut the queues to special care homes by more than half or by 200 people at least.

Economic growth, faster pay rise than expected and drop in unemployment make it possible to raise pensions by 5.8 percent on the average in 2014, marking the biggest rise in the last six years. The average old-age pension will remain exempt from income tax as the tax exempt monthly payment for pensioners will rise by 18 euros to 354 euros.

The budget allows to increase the public sector payroll in all areas of government by 5.1 percent. As a result, personnel costs will increase by 49 million euros. The Estonian government sector's labor expenditures measured as a ratio to GDP are close to the EU average. In 2012, the corresponding ratio was 10.8 percent in Estonia and 10.7 percent in the EU in general. The government's stance is that one should refrain from creating new jobs and rather invest in preserving the competitiveness of the wages of present public sector employees.

Investments in real estate are projected to total 131 million euros in 2014, marking an increase by more than 10 million euros over 2013.

Among other things, implementation of large scale transport infrastructure projects will continue next year. Estonia is scheduled to make the first payment into the Rail Baltic joint venture in 2014. The increase in transport subsidies will enable to ensure transport services in the whole country in a volume similar to this year's or even bigger.

Plans are for the government to give its formal nod to the budget bill on Sept. 24 and hand the bill to the Riigikogu on Sept. 25.