The Estonian cabinet has stated that the 2012 budget has been created keeping in mind the budgetary policies of the national government and will see a deficit of 2.1 percent of the GDP. The basic aim of the 2012 budget is to limit the fiscal deficit to within 3% of the GDP. The government will also look to break even by 2013 fiscal.
Estonia Budget 2012 Highlights and Possible Economic Impacts:
In 2012 the national government will use revenues earned by selling the Kyoto quota units throughout the fiscal.
The payments for the second pillar pensions will be restored as well. Estonia expects that these factors will contribute to the budgetary deficit.
Andrus Ansip, the Prime Minister of Estonia, has stated that governmental investments will make a difference of 1.3 percent of the GDP to the budgetary balance.
The expenses for Health Insurance Fund and social benefits will increase in 2012.
In 2012 the government will earn 6.1 billion euros and spend 6.6 billion euros.
New laws will also contribute to increased operational expenses of the government in 2012.
In 2012 the salaries of senior government officers and ministers will stay the same as 2011.
Pension payments are expected to increase by 4.4 percent in 2012 fiscal.
The total amount paid will be in excess of 70 million euros.
The governmental investments in the public departments will increase in the upcoming fiscal.
The funds for roadwork will go up by 17.7 million euros and 17.5 million will be allocated for buying multi-utility vehicles.
Defense expenditure will stay at 2 percent of the GDP in 2012. This will ensure that Estonia is able to make bigger investments in this sector.
Approximately 250 million euros from the revenue earned by selling emission quotas will be used for various investments in the public sector. Investments will also be made through Riigi Kinnisvara AS.
The government has stated that it will not add to the present levels of debt and will start to increase its financial reserves from 2015 onwards.
In 2012 alcohol excise tax will go up by 5 percent. It is expected to generate revenues worth almost 10 million euros.
Expenditure in social causes will go up by 10% or 190 million euros.
Estonia Defense Budget 2012:
The defense ministry in Estonia has been allocated 340.6 million euros for 2012 fiscal. This implies that the Baltic country has been able complete its promise to the NATO that it will spend 2 percent of the GDP in defense.
The supplies segment comprises the biggest part in the Estonian defense budget for 2012 99.7 million have been allocated for this domain.
25 million euros of the defense budget will be used for ammunition, anti-tank missiles and anti-aircraft arsenal.
25 million euros have been earmarked for communication, surveillance and management systems. This will also include installing a couple of radars Estonia purchased from France.
10 million euros are estimated to be spent to pay for armored vehicles from The Netherlands and buying cars for transporting the forces these vehicles will be bought from Germany.
10 million will be used for purchasing personal supplies of the forces. Most of the defense budget will be used to plug gaps that resulted during the recent global economic meltdown.