According to Prime Minister Kaja Kallas, the more optimistic economic forecast confirms the correctness and efficiency of the government’s crisis management policy. “The sufficiently sizable and well-targeted supplementary budget quickly prepared in spring played an important role, offering the necessary support to the companies and residents that suffered the most,” said Kallas. “It softened the setbacks and laid the groundwork for quick recovery in better epidemiological conditions. As a result, Estonia is one of the few European countries whose economy has risen significantly above the pre-crisis level.”
According to the Prime Minister, the government continues its responsible financial policy, which must also withstand possible negative scenarios. “Naturally, the impact of the crisis has been uneven. The dynamic nature of the pandemic means that future prospects are far from being risk-free. Therefore, we must continue to ensure social support to the vulnerable parts of society and maintain buffers for possible negative developments,” remarked Kallas.
“The economy exceeding expectations also reduces the need for government stimulus. Additional stimulus would cause the sectors working at full capacity to overheat, which would not be beneficial to anyone. At the same time, part of the accelerated growth may be more permanent in nature, therefore serving as a basis for a sustainable increase in wellbeing. Such improvement in long-term prospects can be used to build a bigger increase in expenditure,” the Prime Minister added.
In addition to the economic forecast, the first budget-themed cabinet meeting provided members of the government with an overview of draft legislation that must be submitted to the parliament before the 2022 draft state budget act and the shifting of costs between years.
Discussions on the 2022 budget will continue during the next few weeks. The government must submit the draft state budget to the parliament at least three months before the start of the new budgetary year, i.e. by the end of September.
The Ministry of Finance’s recent economic forecast can be viewed here: https://www.rahandusministeerium.ee/et/uudised/eesti-majandus-taastub-joudsalt.
The government approved the initial 2022 state budget with the state budget strategy in April: https://valitsus.ee/uudised/valitsus-kiitis-heaks-riigi-eelarvestrateegia-aastateks-2022-2025.