Members of the Riigikogu committees gave an overview of factors affecting the state budget, tax changes, the economic situation, and ensuring energy security.<\/p>\n
Among other things, the IMF delegation was interested in the development of Estonia\u2019s tax system to assess how it could better support budget sustainability. Reforms to improve competitiveness were also discussed, including strengthening the investment environment, opportunities for using of artificial intelligence, and labour market policy. Special attention was given to energy policy and the impact of electricity price fluctuations on competitiveness.<\/p>\n
Chair of the Finance Committee Annely Akkermann<\/strong> explained the situation regarding the sustainability of Estonia\u2019s state budget.<\/p>\n \u201cDue to the rapid growth in defence spending and changes in income tax, the general government deficit has risen to 4.5 percent, which will decrease gradually in the coming years and reach 2.8 percent of GDP by 2029. The goal for the coming years is to reduce the budget deficit,\u201d Akkermann said. She pointed out that after the cancellation of a two-percentage-point income tax increase, Estonia\u2019s tax burden fell from 36.6 percent to 35.2 percent. The national debt burden grew by EUR 1.7 billion, to 25.9 percent of GDP. The national debt burden will increase because of all the additional costs, and is predicted to reach 31.4 percent of GDP in 2029, and the interest costs will amount to 0.8 percent of the GDP, or EUR 417 million. High inflation has slowed down and currently stands at 4 percent.<\/p>\n According to Chairman of the Economic Affairs Committee Marek Reinaas<\/strong>, the meeting provided a useful comparative overview of the economic situation in neighbouring countries. He noted that the Estonian economy was on the rise, which was evidenced by 2.4 percent economic growth. \u201cTo support a technology-intensive growth cycle in Estonia\u2019s economy, we are creating an attractive investment environment, a supply of clean energy, and diverse access to capital for businesses that meet the economy\u2019s changing needs,\u201d Reinaas explained. To resolve energy-related challenges and achieve more affordable electricity prices, it is necessary to invest in the construction of wind farms to ensure that 70 percent of the energy portfolio consists of non-dispatchable green energy.<\/p>\n