Estonia: The Riigikogu passed a Resolution on the use of the Stabilisation Reserve Fund

NordenBladet — At today’s plenary sitting, the Riigikogu passed the Resolution under which the funds of the Stabilisation Reserve Fund can be used in the resolution of the emergency situation that has been declared due to coronavirus.

With the Resolution of the Riigikogu “Implementation of the Funds of the Stabilisation Reserve Fund” (168 OE), submitted by the Government, the Government proposed to the Riigikogu to implement the funds of the Stabilisation Reserve Fund to the full extent as necessary.

Under § 71 of the State Budget Act, the Stabilisation Reserve Fund is formed in order to finance expenditure and investment and financing transactions that have the following objectives: the reduction of economic risks; the prevention or mitigation of socio-economic crises; the resolution or prevention of an emergency situation, a state of emergency, a state of war or other extraordinary situation or a crisis with material effect, or performance of the obligations provided for in a collective self-defence agreement; the resolution and prevention of a financial crisis that may cause difficulties related to liquidity or solvency for the financial institutions or significant disruptions in the payment and settlement systems.

In connection with the emergency situation that has been declared due to the spread of COVID-19, a need to use the funds for all the abovementioned purposes may arise. As a result of the Resolution, it is possible to implement the funds of the Stabilisation Reserve Fund to the full extent to resolve the emergency situation that has been declared due to coronavirus and to mitigate the general economic crises and socio-economic crises related thereto according to the need to manage the state cash flow. It will be possible to finance expenditure, investments and financing transactions of the state budget for 2020 and 2021 at the expense of the funds.

During the debate, Aivar Sõerd (Reform Party) and Kaja Kallas (Reform Party) took the floor. They expressed their regrets that the Resolution did not include the principle according to which the Stabilisation Reserve Fund would be deployed only as the very last resort, and noted that Estonia should rather take loans.

58 members of the Riigikogu voted in favour of the passage of the Resolution.

Two Bills passed the second reading.

The Bill on the State’s Supplementary Budget for 2020 (171 SE), initiated by the Government, will include in the supplementary budget the budget necessary to implement the economic measures related to the spread of the coronavirus. The aim of the measures is to mitigate damages, to stimulate the economy and to accelerate the exit from the crisis.

The supplementary budget describes the procedure for the implementation of various measures of the aid package, and the funds to be allocated. In the drafting of the supplementary budget, the changed economic environment has been considered. It also takes into account the changes in the receipt of tax revenues in view of the new spring economic forecast (the expenses directly related to tax revenue under special Acts have also been adjusted accordingly) and the measure package. The non-tax revenue projections and the budgets of calculated expenditure which have been specified with the supplementary budget have also been re-assessed.

According to the supplementary budget, the government sector’s nominal budget deficit will amount to 2.62 billion euro together with the Government’s economic support measures. The measures will have an impact of 1.15 billion euro on the Government’s nominal budget position. The supplementary budget will reduce state budget revenues by 1.63 billion compared with this year’s budget. The supplementary budget’s measures will have an impact of 513 million in total on the current state budget’s expenditure. This will be supplemented by application of reserves.

The state budget has a nominal deficit of 10.1 per cent of GDP and the structural deficit amounts to 5.5 per cent of GDP. The forthcoming economic recession will bring about a large-scale reduction in tax revenues which will affect all government sector levels. The state budget revenue will fall from 11.8 billion euro to 10.2 billion euro which will be a 1.6-billion decrease.

According to the new forecast of the Ministry of Finance, compared to the base scenario of the state budget, the economic recession will be ten per cent, which was lowered from the 2.3-per cent growth forecast of last autumn to an eight-per cent fall.

During the debate, Kaja Kallas (Reform Party), Lauri Läänemets (Social Democratic Party), Aivar Sõerd (Reform Party), Jürgen Ligi (Reform Party), Mart Võrklaev (Reform Party), Andres Sutt (Reform Party), Raimond Kaljulaid, Oudekki Loone (Centre Party), Indrek Saar (Social Democratic Party), Maris Lauri (Reform Party) and Urmas Kruuse (Reform Party) took the floor.

The Riigikogu set the deadline for submission of motions to amend the Bill as 9 a.m. on 14 April.

The Bill on Amendments to the Acts relating to the Act on the State’s Supplementary Budget for 2020 (measures related to the spread of the coronavirus that causes the COVID-19 disease) (169 SE), initiated by the Government, consolidates amendments to the special Acts that have an impact on the supplementary budget, that contain bases or rates for financial calculations and that need to be amended for adoption of the supplementary budget and implementation of the measures. The State Budget Act will also be amended by adding the provisions concerning the preparation of the budget strategy and the Bill on the state budget under the circumstances of an emergency situation.

The Bill will amend the Alcohol, Tobacco, Fuel and Electricity Excise Duty Act, the Support of Enterprise and State Loan Guarantees Act, the Estonian Defence League Act, the Environmental Charges Act, the Funded Pensions Act, the Value-Added Tax Act, the Creative Persons and Artistic Associations Act, the Taxation Act, the Social Benefits for Disabled Persons Act, the Health Insurance Act, the State Budget Act, the State Pension Insurance Act, the Social Welfare Act, the Social Tax Act, the Health Services Organisation Act, the Income Tax Act, the Unemployment Insurance Act and the Work Ability Allowance Act.

During the debate, Valdo Randpere (Reform Party), Ivari Padar (Social Democratic Party), Maris Lauri (Reform Party) and Indrek Saar (Social Democratic Party) took the floor.

A Bill passed the first reading. 

The amendments to the Bill on Amendments to the Atmospheric Air Protection Act and the Alcohol, Tobacco, Fuel and Electricity Excise Duty Act (159 SE), initiated by the Government, will enable suppliers to fulfil their 2020 monthly obligation to reduce fuel life cycle greenhouse gas emissions flexibly – on a semester basis. The Atmospheric Air Protection Act will also be amended so that after 2020 suppliers will have to continue to fulfil their abovementioned obligation on a year basis. In addition, the definition of supplier will be amended in order to also include among reporting entities enterprises who make available electricity, gaseous fuels and hydrogen used in transport. Also, for the purposes of better functioning of the fuel monitoring database, the tasks of the chief processor of the Ministry of the Environment will be given to the Environment Agency who is the entity processing and collecting data, and the list of the data entered into the database will be specified.

The Alcohol, Tobacco, Fuel and Electricity Excise Duty Act will be amended to ensure legal clarity in the interpretation of the definition of shale-derived fuel oil. In addition, the Act will be amended by adding a new code of the combined nomenclature which will begin to be used in the definition of the main Estonian oil products in the future. The abovementioned amendment is due to the implementation of a new laboratory method for determination of aromatic compounds. The Ministry of Finance has submitted a relevant proposal.

The Riigikogu set the deadline for submission of motions to amend the Bill as 5.15 p.m. on 27 April.

The sitting ended at 7.47 p.m.

Source: Parliament of Estonia