Bank of Estonia President Madis Müller writes in the central bank's blog that a persistent budget deficit and rapidly growing public debt create many problems for Estonia, and constantly rising interest payments take away money that the country could use for other necessary expenses. /nginx/o/2024/07/12/16217829t1hf940.jpg)
Wallet. Photo: IMAGO
Bank of Estonia President Madis Müller writes in the central bank's blog that a persistent budget deficit and rapidly growing public debt create many problems for Estonia, and constantly rising interest payments take away money that the country could use for other necessary expenses.
“In the event of an excessive budget deficit, the European Commission and finance ministers of other countries may begin to limit the choices of the Estonian government when preparing the budget. In addition, we will become increasingly dependent on creditors who assess the state of the state. finances are in order, offering us loans even in future crisis situations,” said Müller.
According to the latest forecast from the Ministry of Finance, the Estonian state's expenses in the next four years will exceed revenues so much that the government will have to borrow more than two billion euros annually. This is the case if Estonia continues to use the taxes and tax rates that have been agreed so far and are based on the expected increase in costs.
“Estonian government spending is expected to reach 18.5 billion euros next year, and approximately every eighth euro spent will have to be covered with new loan money. This is clearly too much in a situation where the economy is already recovering from last year's recession. two years by all assumptions. We have to admit that we as a country are living beyond our means,” writes Müller.