EDITORIAL ⟩ A new phase of trickery

Daily caricature. 26.09 «THERE ARE THREE OF US, BUDGET! AND WE ARE NOT AFRAID OF YOU!» «REMEMBER, I DON'T LIKE YOU!» «RUFF!» Photo: Urmas Nemvalts

• Our economy is projected to grow by 1.9 percent, while the budget will grow by 3.8 percent.
• The Fiscal Council believes that a further billion euros should be cut over four years.
• The crucial cuts should be made all at once, rather than stretch them out over four years.

It seems like we are being presented with yet another act of trickery. At the press conference held on wednesday, the government introduced the new state budget and reiterated its previous promise to cut the budget by 1.4 billion euros over the next four years. At the same time, we have heard that compared to last year, the budget will increase by 3.8 percent. What is it then?

It seems like invisible cuts this year, as the government has not even been able to freeze the budget's growth.

The muted nature of the budget cuts has also been criticized by the Fiscal Council. The chairman of the Fiscal Council, Peter Lõhmus, has stated that the pace of the cuts does not comply with valid domestic fiscal rules, which do not allow planning for a structural deficit of more than 1 percent of GDP. In other words, the Fiscal Council believes that an additional one billion euros in budget cuts is necessary over the next four years.

Postimees agrees with the Fiscal Council's observation that cuts in the public sector are too slow and modest, but points out that the domestic budget rules, which focus on structural budget deficit, represent a somewhat stagnated approach. Structural budget balance has remained a murky subject, which no longer receives much attention in Europe.

Such requirements were Europe-wide until the start of the COVID-19 pandemic. Then, the European Commission temporarily suspended the enforcement of these rules, and around the beginning of this year, the Commission introduced new rules. Simply put, a spending rule that states the budget can grow at the same rate as the country's economy.

So why are we failing to curb budget growth then? And why can't we make cuts quickly and decisively, instead of delaying them?

The Estonian economy has been in recession for nine months. Eesti Pank predicts economic growth of 1.9 percent for next year. But how much will our budget grow? Right, 3.8 percent. So exactly twice as much as it could grow given the European Commission's spending rule. This is a point to which the Fiscal Council could also have drawn attention.

So why are we failing to curb budget growth then? And secondly, why can't we make cuts now, make them quickly and decisively, instead of delaying them? The private sector does not say to employees: this year we will cut your salary by five percent, next year by 20 percent or 30 percent, and in the third year we will dismiss you. If a company has problems, it will look for new markets immediately and cut costs resolutely right away, not over several years.

Well, it is impossible to compare the costs of the state with those of a private company in all respects. But docking a dog's tail one piece at a time, like they did in a Gabrovo joke, is unreasonable for the state sector as well. Why suffer pain every year and keep stress up constantly? The crucial cuts should be made at once, as this would already give us a significant temporal effect compared to dispersing them over several years.

So, to those with concerned faces who talk to us about tough statesmanlike decisions, we say that, with all due respect, we don't see any evidence of them yet.