On Wednesday, the Riigikogu passed the 2014 state budget which has grown in volume by nearly five per cent compared to this year. For the first time, the volume of the state budget exceeds eight billion.

The revenue of the next year’s state budget totals EUR 8.02 billion, and the expenditure EUR 8.06 billion. Taxes and social security payments will make up nearly EUR 6.63 billion of the revenue, foreign supports almost EUR 900 million, i.e. close to one tenth. Compared to this year’s state budget, tax revenue will increase and non-tax revenue decrease.

As far as the expenditure goes, social protection, health care, economy and education will receive more. The largest part of the state budget is formed by social and other benefits to natural persons – 27.7 per cent of the total volume, i.e. EUR 2.28 billion. This includes EUR 1.5 billion for state pension insurance. In 2014, the state will pay an average of EUR 1,768 per inhabitant in various social benefits.

EUR 421 million will be allocated in 2014 for guaranteeing public order and security, i.e. 11.1 % more than the year before. EUR 358 million will be allocated for national defence, i.e. EUR 21 million more than the year before. EUR 760 million will be allocated for the expenses of the education sector, which is 4.7 percent more than this year. Expenses on education make up 9.4 per cent of the total budgeted expenses.

With the average increase in salaries exceeding the expectations and the unemployment decreasing, pensions will rise next year by an average of 5.8 %, which is the largest increase in pensions of the last six years. The income tax exempt minimum of pensions will increase so that the average pension will be exempt from income tax. The salary fund of state employees will increase by 5.1 per cent, which will increase their disposable income, although this will still remain below the 2008 level.

The receipt of the local government income tax will increase in 2014 by eight per cent to EUR 783 million. Government sector debt burden will increase by the end of the year to 10 per cent of GDP, which means that among the Eurozone states Estonia remains a country with a very low debt level. The liquid reserves of the central government will fall to EUR 380 million by the end of 2014. Only 6.6 per cent of the GDP will remain in the reserve by the end of the next year.

The state budget has been compiled on the basis of the summer economic forecast of the Ministry of Finance, which predicts a 3.6 per cent growth for the Estonian economy, with inflation slowing down to 2.7 per cent. Employment is predicted to rise in 2014 and salaries should continue to increase; the Ministry expects export to grow by 6 per cent and import to slow down to 6.8 per cent. Average salary in Estonia is expected to increase to EUR 999.

The Chairman of the Estonian Reform Party Faction Jaanus Tamkivi said before the final vote on the 2014 State Budget Act that this is a good budget which makes it possible to improve the wellbeing of the Estonian people. The Chairman of the Pro Patria and Res Publica Union Faction Kaia Iva noted the salary increase for the employees of the internal security field, and for teachers for the second year in a row.

The Chairman of the Social Democratic Party Faction Sven Mikser raised several problems connected to the budget and said in his conclusions that the Social Democrats cannot support a state budget that will not address a large number of problems facing Estonia. The Chairman of the Estonian Centre Party Faction Kadri Simson said that all in all the 2014 budget is very sad, tired and lacklustre, and that it simply attempts to steamroll over the problems, which is why the members of her party will vote against it.

59 members of the Riigikogu voted in favour of and 41 against adopting the 2014 State Budget Act.

The verbatim record of the sitting (in Estonian) 

The Riigikogu Press Service