Government reaches agreement on state budget strategy

Photo: Urmas Luik / Pärnu Postimees

The government on Wednesday reached an agreement on Estonia's budget strategy for 2018-2021, which will be the basis of the state's financial plans for the next four years.

Members of the government agreed on the budget position goal and the more important investments of the next four years, government spokespeople said.

The government agreed with the aim of the budget position of the general government to use the surplus of previous periods for strategic investments in the amount of 0.5 percent of the GDP in 2018 and 2019, and in the amount of 0.3 percent of the GDP in 2020. By 2021, the budget of the general government should reach a structural balance.

"Four main goals of the government are highlighted in our financial plan for the next four years: to increase the Estonian population, to increase societal welfare and coherence, to bring Estonia out of a financial standstill, and to retain and strengthen Estonia's security," Prime Minister Juri Ratas said.

"These goals are expressively demonstrated by the government's decision to conduct a healthcare funding reform, which will help ensure accessible and high quality healthcare to everyone. Investment decisions are also important to liven the Estonian economy to improve the welfare of the whole society. For example the renovation of Tallinn's Linnahall arena, improved roads and a faster internet connection," Ratas said. He added that in addition to the salary increase of teachers and cultural professionals already stipulated in the coalition agreement, an agreement was made on Wednesday to increase the salary fund of police officers and rescue workers by 3.5 percent.

Minister of Finance Sven Sester said that the government's tax policy is a whole and aimed at economic growth. "Changes in the tax policy make the tax structure more friendly towards economic growth: taxes paid from income will decrease and taxes on consumption will increase," Sester said.

Minister of Health and Labor Jevgeni Ossinovski said that 215 million euros are to be allocated to healthcare in the next four years. "The government has decided to contribute to healthcare on behalf of non-working pensioners. This is definitely one of the most important decisions of this government, as this resolves the long-standing problem of underfunding of the healthcare system," he said.

"By 2022, the additional funding of the Health Insurance Fund will reach 13 percent of the pensions of old-age pensioners, which will give the Health Insurance Fund an additional 100 million euros. Already next year, 37 million euros of additional funding will be allocated to healthcare. The additional resources will be used to shorten waiting lists, which will ensure faster accessibility of the services to the people of Estonia," Ossinovski said.

To further promote economic growth, the government decided to allocate an additional 6.5 million euros a year to a scientific and development activity and innovation program. The funding of the sector in relation to the GDP will not be decreasing as a whole.

The government will continue the action of supporting big investors in 2018, for which 3 million euros has been designated. Agricultural businesses will be given funding for activities relating to opening new export markets.

In the field of information and communication technology, the government decided to increase the funding of the e-residency program by 1.36 million euros for the next four years, so more applications could be accepted and the procedures could be accelerated.

The budget strategy will be the basis of drawing up the budget for the next year this fall.