OREANDA-NEWS. October 04, 2011. Prime Minister Andrus Ansip said in his address to parliament upon handing over the draft state budget for 2012 that the document is a conservative and responsible budget aimed at increasing stability and employment.

”Only if the state’s finances are in sure hands and the economy is in order can all people in Estonia enjoy higher wages, pensions and family allowances. Only then can we allow ourselves education and security of a Nordic calibre and better medical care,” said the head of government.

The Prime Minister said the state would continue to stimulate the economy by increasing investments, which will result in a significant increase in employment. Compared to last year, public sector investments will grow 28 percent – to 1.25 billion euros – making up 7.3 percent of the gross domestic product.

“Even though unemployment has dropped, the state will continue contributing to the Unemployment Insurance Fund in the same amount as last year. The set goal is to reduce long-term unemployment and greater participation in lifelong learning,” said Ansip.

The prime minister said the government had made the optimum choices in light of the conditions and the budget submitted to the Riigikogu is a “responsible” budget that will withstand even the Ministry of Finance’s economic forecast risk scenario. “For the Pro Patria and Res Publica Union and the Reform Party, a conservative budgetary policy is not just an empty slogan; it’s a promise. My request to you, my dear MPs in the opposition, is this: in deliberating on this budget, accord the same reverence to the principles of strict budgetary policy as you have for the last two decades. It is a great challenge to refrain from discretionary spending for which no money exists,” said Ansip.

A total of 6.11 billion euros is planned as revenue in next year’s budget. Expenditures will be 6.57 billion euros. Compared to 2011, spending is 11 percent higher – a difference of 652.7 million euros. The budget does include a deficit of 2.1 percent of the gross domestic product, which is mainly due to the investment of the proceeds of sales of emissions allowances and the full resumption of state contributions into the second pillar of the funded pension.

Estonian government debt is likely to remain the lowest in the European Union next year as well – 5.8 percent of GDP. It is planned to finance the state budget deficit and financing transactions from reserves.