“The health care crisis, which has been going on for a long time, has created significant and sometimes unprecedented challenges to the Estonian health care, social protection and education system, our people’s incomes, and the viability of companies. Many of these difficulties are due to the crisis situation and could disappear if the coronavirus recedes,” said Prime Minister Kaja Kallas. “The crisis has not affected all areas of life. Thus, new state aid measures must be short-term, but properly and precisely targeted. The supplementary budget will allow the economy and normal life in Estonia to recover as soon as possible after easing the restrictions,” said Prime Minister Kaja Kallas.
Minister of Finance Keit Pentus-Rosimannus added that the supplementary budget provides temporary and fast support that is as accurate as possible for maintaining people’s incomes, jobs, and entrepreneurship, which has been hit hardest by the crisis. “In addition to supporting the health care sector, which is approaching its limits, we will ensure that the economy does not fall into a larger hole as a result of the health crisis and that temporary, effective relief supports the rapid recovery after the crisis,” said Pentus-Rosimannus.
“The fields of health and work are most affected by the crisis. With the additional budget, we will support our health sector to ensure the necessary medical care for the Estonian people and to enable vaccination close to home. By extending the remuneration compensation in March and April, we will help people and companies overcome the temporary difficulties caused by the COVID-19 crisis,” said Minister of Health and Labour Tanel Kiik.
According to Jaak Aab, Minister of Public Administration, the main goal of the supplementary budget is to alleviate the situation arising from restrictions, help people, maintain jobs, and be supportive of entrepreneurs. “I believe that the measures proposed will be of great help in supporting sectors affected by the crisis and restrictions. We have considered it important to empower the health care sector, but also to support companies, the cultural sector, and local governments,” said Aab. “The package of measures for entrepreneurs and local governments will enable almost 96 million euros in investments and cover the costs of the crisis.”
The majority of the supplementary budget, i.e. 87 per cent, is support to the private sector and other government agencies (remuneration support, investment support for local governments, and other supports to the private and public sectors). Almost 13 per cent are operating expenses, which are mainly related to health care.
The supplementary budget will direct more than 150 million euros to health care to overcome the health crisis. In order to ensure the necessary medical care for the Estonian people, 52 million euros will be allocated to cover the extraordinary additional COVID-19-related costs of hospitals, emergency medical care departments, and other medical institutions. More than 20 million euros will be allocated for coronavirus testing. More than 30 million euros will be allocated for the purchase of COVID-19 vaccines and the organisation of vaccinations. 26.5 million euros from the supplementary budget will be allocated to the Estonian Health Insurance Fund to restore the statutory reserve capital.
In order to prevent the spread of the coronavirus, from January 2021, employers will compensate the second to fifth day of sick leave and the Estonian Health Insurance Fund from the sixth days of illness. In order to extend the reimbursement of sick days from the second day of illness until the end of 2021, 12 million euros will be allocated to the Estonian Health Insurance Fun. Additional funding will also be provided to the Health Board to cover the costs of crisis management, the procurement of COVID-19 medicines and medical devices, the development and maintenance of IT solutions, and information activities to raise public awareness.
In accordance with the forecast, 140.1 million euros will be needed to pay the remuneration compensation, of which 102.2 million euros from the supplementary budget will be allocated to the Unemployment Insurance Fund. In order to maintain people’s jobs and ensure their economic subsistence, employees and self-employed persons and their employees are paid remuneration compensation for March and April. A reserve has also been taken into account if there is a need to extend the restrictions. Last year, the remuneration support depended on the sector in which the company operates. This year, however, the support criterion is a sharp drop in turnover.
To address people’s stress levels and mental health challenges, an additional 1.2 million euros will be allocated to expanding and improving access to primary mental health services. This includes support for the activities of the Emergency Mental Health Headquarters and Think Tank convened by the Minister of Social Protection to implement rapid and effective assistance measures, involving public authorities, the private sector, NGOs, and experts in the field.
In 2020, the number of suicides of children and young people, as well as serious violent crimes, and the demand for various mental health services increased, which is why the capacity to provide round-the-clock crisis assistance and counselling will be increased with additional resources in the amount of 1.65 million euros.
In the field of the Minister of Economic Affairs and Infrastructure, commercial bus carriers will receive 4 million euros to compensate for lost ticket revenue.
In the field of the Minister of Entrepreneurship and Information Technology, an additional 25 million euros will be allocated through Enterprise Estonia to the tourism sector to support tourism companies whose activities have been largely suspended by restrictions but still have high monthly fixed costs, such as accommodation, spa, and catering establishments. In addition, the state will also support companies whose activities have been significantly restricted since March by the government order with an additional 19 million euros. The purpose of the support is to enable companies to reopen their doors, restart their business, and keep their jobs once the restrictions have been lifted.
The contribution for the culture and sport sector from the supplementary budget totals 42 million euros. The supplementary budget helps to cover unavoidable expenses for which it was not possible to earn income due to the restrictions imposed on the sector.
More than 21 million euros will be allocated to support cultural operators to help them cover staff and other unavoidable costs in accordance with contracts under the law of obligations. A separate 5.3 million euros will be allocated to cinemas, filmmakers, and film distributors. The supplementary budget to support freelance artists is 6.7 million euros. The budget for support in the field of sports is nearly 2.7 million euros, to which is added a separate risk fund of 6 million euros, from which international cultural and sports events receive support.
14.4 million euros has been allocated for the objectives of the Ministry of Education and Research. Much of this is for helping pupils and young people with educational gaps and supporting their mental health. Ensuring the existence of computers and internet connection necessary for distance learning is also important.
6 million euros is planned for summer camps, which can provide children and young people with entertainment promoting mental health, help develop learning skills, and reduce education gaps. 6 million euros is also distributed to support private hobby education and recreational activities and operators of private schools, private kindergartens, and private childcare institutions.
An additional 0.5 million euros will be allocated to schools to purchase additional computers to distribute to students during the distance learning period. 0.9 million euros is planned for the acquisition of rapid tests for educational institutions.
In cooperation with local governments, 1 million euros is planned in the supplementary budget to ensure better internet connection during the distance learning period.
A total of 46 million euros is planned for local governments with the additional budget. 15 million euros is planned to help local governments due to reduced revenues and increased expenditures. COVID-19 mainly affects the proceeds from municipal income tax, kindergarten place fees, and recreational activities fees.
The additional funds will also help local governments to cover the costs of medical and hygiene supplies and special clothing, as well as the costs of social protection, related to preventing the spread of the virus and mitigating its effects.
30 million euros will be distributed to support local government investments. Local governments can target the resources in accordance with the needs of the region, with particular reference to today’s challenges, such as improving indoor ventilation, increasing energy efficiency, and demolishing unnecessary buildings.
Almost one million euros will be allocated to the Ministry of the Interior to combat the coronavirus crisis and deal with its aftermath. In addition, the supplementary budget provides for support for fishery producers in the field of the Ministry of Rural Affairs and for environmental education in the field of the Ministry of the Environment.
The government will also set aside a reserve of 117 million euros with the supplementary budget to compensate for the temporary suspension of state contributions to the second pillar for those who have expressed a wish to leave the second pillar by 31 March 2021. As at 16 March, 119,684 people, or 15 percent of those who have joined, have submitted an application to leave the pillar. An application already submitted can be cancelled until the end of July.
Supplementary budget expenditures and subsidies amount to 641 million euros, but as they produce tax income, the negative impact on the nominal government budget position is smaller: 453 million euros, or 1.6 per cent of the GDP. What the government budget position will look like this year will become clear on 5 April, when the Ministry of Finance publishes its spring economic forecast.
The supplementary budget measures are part of the Treasury’s cash flow and are financed, as appropriate, either by using the liquidity reserve or by raising debt funds.