Representatives of Riigikogu committees met with IMF delegation

Chair of the Finance Committee Annely Akkermann, Deputy Chairman of the Finance Committee Andrei Korobeinik and members of the Finance Committee Marek Reinaas, Aivar Sõerd and Mart Võrklaev explained that the economic downturn had strongly affected the competitiveness of Estonian companies.

Akkermann said that in fiscal policy, Estonia was implementing measures to increase the revenue base, limit the growth of budgetary expenditure, and improve the balance between revenues and expenditure.

“The budget will be significantly affected by the increase in defence spending, which is currently at 3 percent, but we are moving towards 5 percent,” Akkermann pointed out. She added that the projected budget deficit was 3 percent.

“The main objective of fiscal policy in the coming years is to reduce the deficit. Estonia’s budget expenditure is to a very large extent indexed, or linked to the growth of GDP. Examples of this include the financing of higher education and research, and defence spending, as well as the linking of pensions to the consumer price index, which will lead to budgetary expenditure increasing faster than the revenues. In this sense, fiscal policy needs structural reforms, in particular to reduce the impact of indexing,” Akkermann said.

According to member of the Economic Affairs Committee Andres Sutt, Estonian economy has all the prerequisites for a new technology-intensive growth cycle. Maintaining an attractive investment environment, the provision of clean energy ranging from wind energy to nuclear power, diverse access to capital for start-ups, growth companies and traditional businesses, and the availability of skilled workforce that meets the changing needs of the economy will also ensure Estonia’s economic success. In this context, people’s increased investments in the second and third pillars of the pension system have a key role in increasing the importance of capital market based financing. Sutt explained that Estonia’s economy was projected to grow by about 1.6 percent in 2025 and by about 3 percent in the following two years.

Monitoring of the economies of IMF member countries, including Estonia, is generally carried out in the context of the economic policy consultations that generally take place once a year. The common name “Article IV consultations” derives from Article IV of the IMF’s Articles of Agreement. IMF’s national cooperation partner in Estonia is Eesti Pank (Bank of Estonia), which publishes summaries of their missions, etc. on its website.

The mission team specifies the objectives, scope, details, timing and expected results of the Article IV cycle. It is interested in discussing recent macroeconomic, fiscal and financial developments, prospects, risks and policies. The mission team is interested in feedback from members of the Riigikogu committees on their analytical and policy agenda before the Article IV consultations.

As this is an interim mission of the IMF, the team will not prepare a summary statement and there will be no press conference at the end of the mission. However, the interim mission is important because it usually prepares the first version of the Article IV report, which is supplemented with additional themes and economic policy messages during the mission. 

The IMF mission is headed by Vincenzo Guzzo, and the members of the delegation are Bingjie Hu, Irina Bunda and Carlos de Resende.  

The International Monetary Fund discusses important economic policy issues with all member states once a year. The outcome of the consultation is a report reflecting the IMF experts’ assessment of Estonia’s economic policy.

Riigikogu Press Service
Gunnar Paal
+372 631 6351, +372 5190 2837
gunnar.paal@riigikogu.ee
Questions: press@riigikogu.ee

Link uudisele: Representatives of Riigikogu committees met with IMF delegation

Source: Parliament of Estonia