According to ANDRES LIPSTOK, Governor of Eesti Pank, the government should continue pursuing balanced budget policy.
"Taking into account the current situation in the global financial markets, the uncertain outlook of the global economy and the forecast of our Ministry of Finance, it is very important the government should continue with balanced budget policy," said Lipstok. "Whereas the next year's budget is prepared with nominal growth forecast being 8%, expenditure is planned to increase approximately 10%. This exceeds also the expected long-term budget revenue growth. With this growth pace, achieving a balance should be a natural objective," Lipstok stressed.
"Budgetary balance can also be achieved by increasing revenue, but the government should bear in mind that prudent tax policy should be planned over a long-term period. Tax policy must not depend on the current economic situation, it should create the feeling of certainty and anticipation in economic agents," said Lipstok, stressing that the preparation of the budget should proceed from curbing expenditure growth.
