Annual State Budget and Economic Forecasts

Annual State Budget


The State Budget Strategy is implemented through annual action plans of the development plans of the areas of government, which serve as the basis for compilation of state budgets.

On the basis of the State Budget Strategy the constitutional institutions, the State Chancellery and the ministries submit draft budgets for the next budgetary year, i.e. the first action plan of the development plans and the respective financial plans to the Ministry of Finance.

The conditions of drafting and submitting budgets are established by a regulation of the Minister of Finance. After submission of the draft budgets, i.e. the action plans they are analysed in the Ministry of Finance and after any possible differences have been resolved in negotiations the Ministry of Finance draws up the draft State Budget Act and submits it to the Government of the Republic along with an explanatory memorandum. After the Cabinet has made a decision the Government of the Republic approves the draft act and submits it to the Riigikogu (Estonian Parliament) not later than three months before the start of the budgetary year, i.e. by the end of September.

The Riigikogu discusses the draft State Budget Act, makes amendments where necessary and adopts the state budget as an act, which enters into force at the beginning of the next budgetary year, i.e. on January 1. The state budget can be amended or modified in the middle of the budgetary years on the basis of a proposal of the Government of the Republic (if the expenditure increases or decreased) through a supplementary budget based on the additional authorisation granted to the Government of the Republic.

After the State Budget Act has entered into force the Government of the Republic will approve its specified action plan for the corresponding year and an additional classification of the budget expenditure based on their economic content. In the course of the budgetary year the Ministry of Finance (State Treasury) organises the cash service of the state budget (management of the state’s cash flow and organisation of accrual of revenue and making payments).

 

Economic Policy and Forecasts


Economic Policy


According to EU rules on the coordination of budgetary policies the Member States of the European Union must annually submit updated stability and convergence programmes (members of the eurozone and the Member States who are not using the euro, respectively).

Estonia is a full member of the European Economic and Monetary Union (EMU) since 1 January 2011 and submitted its Stability Programme to the European Commission and the Council of the European Union for the second time in 2012.

The submission and assessment of stability and convergence programmes is an important part of the coordination and monitoring of the economic policy of the European Semester.

 

The Commission and the Council assess the stability and convergence programmes within the scope of the European Semester before the most important decisions are made in the preparation of the budgets of Member States in order to give policy recommendations on fiscal policy intentions if necessary.

Estonia's fiscal policy remains in line with the Stability and Growth Pact. The Stability Programme was prepared in parallel with the national State Budget Strategy in consideration of the government’s goals and policies, which are stipulated in the Coalition Programme and other strategic documents.

Economic Forecasts


The Ministry of Finance prepares an economic forecast twice a year (in the spring and summer), which is the basis on which the State Budget Strategy, Stability Programme and State Budget are prepared.

Last updated: 15 August 2017