Estonian Prime Minister Kristen Michal has submitted his government’s draft state budget for 2025 and budget strategy for 2025-2028 to the country’s parliament, the Riigikogu, ERR reports. According to the Ministry of Finance, budget expenses and investments will increase by 3.8% to EUR 19.1bn and revenues by 5.2% to EUR 17.7bn in 2025, ERR reported. The budget deficit will thus amount to EUR 1.35bn or 3% of GDP. Compared to 2024, the budget deficit will decline by 11.5%. Estonia’s Fiscal Council noted that the planned deficit violated budgetary rules, ERR reported.
Estonia’s overall tax burden will increase by 0.7 percentage points to 35.8% of GDP. Budget investments will increase by 9% to EUR 869mn. The government plans to cut EUR 132mn from state operating costs and subsidies. Peeter Raudsepp, director of the Estonian Institute of Economic Research (EKI), noted that the savings were not drastic, ERR reported. Michal promised stable tax policies once investments in defence and cost-cutting plans were implemented, ERR reported. He said that the government would save altogether EUR 1.4bn in public spending over the next four years.