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Incoming Estonian coalition gov't warned against extensive borrowing

Xinhua, November 17, 2016 Adjust font size:

Outgoing Estonian Prime Minister Taavi Roivas said Wednesday that extensive borrowing wouldn't be possible for the incoming new coalition government in 2017.

Given that the budget for 2017 has reached the Estonian parliament and the parliament is forbidden by law from undermining the balance of the budget, it will not be possible to borrow money in significant amounts next year, Roivas was quoted as saying in parliament by Estonian Public Broadcasting.

It would be possible to borrow extensively in 2018, yet this would require changing the State Budget Act, which calls for a structural balance of the budget, according to Roivas, who pointed out that European Union (EU) rules did not allow for a very large budget deficit.

Earlier, Estonian Center Party policymaker Kadri Simson told local media that the new coalition government likely to be formed would be Centre, Pro Patria and Res Publica Union (IRL), and the Social Democratic Party, and that it could borrow up to 100 million euros (about 107 million U.S. dollars) or about 0.5 percent of gross domestic product (GDP).

As no major policy shifts are expected before 2017, the above three parties indicated that the most drastic change to the budget would be to drop the 0.5 percent social tax cut included in it by the outgoing Reform Party, the Social Democratic Party and the Pro Patria and Res Publica Union coalition government.

On Nov. 9, Roivas lost a no confidence vote at the Estonian parliament after a motion was initiated by the opposition Center Party, Free Party and Conservative People's Party.

The motion alleged that the Estonian government led by Roivas lacked reasonable tax and economic policy, and therefore it was impossible to bring Estonia out of economic stagnation. Endit