Under the State Budget Act, the Fiscal Council must give its opinion on the goals for the general government budget position reflected in the budget strategy and the stability programme, looking at the budget rules and the need to adjust the structural budget position.

The state budget strategy for 2016−2019 sets a medium-term goal for Estonian fiscal policy of a structural surplus in the general government budget. The government wants to achieve a structural budget surplus of 0.6% of GDP in 2016, and a surplus of between 0.2% and 0.6% of GDP in the other years of the budget strategy.

The institutions analysing the Estonian economy calculate the structural budget position with different methodologies, and so they produce differing results. The Fiscal Council finds that the structural budget position for 2016−2017 calculated using the methodology of the Ministry of Finance may be overestimated.

The nominal position of the general government budget is either very close to balance or in surplus throughout the whole of the budget strategy period. This shows there is no threat to the long-term sustainability of the fiscal policy. As there are major disagreements in the calculations of the structural budget position, it is good that the government wants to achieve a budget surplus next year.

The regular meeting of the Fiscal Council where the targets for structural budget position for 2016−2019 was discussed was held on Monday in Tallinn. The Fiscal Council opinion and a more thorough explanatory report can be found here: Opinion on the Targets for Structural Budget Position.pdf

Additional information:                                                                                                          Raul Eamets                                                                                                                     Chairman of Fiscal Council                                                                                              Tel: 514 0082                                                                                                               Email: raul.eamets@ut.ee

Background Information

Under the State Budget Act, the Fiscal Council must give its opinion on the goals for the general government structural budget position reflected in the budget strategy and the stability programme, looking at the budget rules and the need to adjust the structural budget position. The law requires the budget for each year to be agreed so that the budget for the general government is at least in structural balance.