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General government deficit decreased last year

Posted on 27. March 2014 10:00

According to preliminary data of Statistics Estonia, in 2013 the Estonian general government deficit was 0.2% and the gross debt level was 10% of the Gross Domestic Product (GDP).

At the end of 2013, the total expenditures of the general government exceeded the revenues by 34 million euros, accounted as the Maastricht deficit criteria. By the end of the year, the central government deficit decreased from 123 million euros in 2012 to 14 million euros. The deficit of the local government sector increased almost three times over the year, amounting to 83 million euros. The budget of social security funds was also in surplus by 63 million euros, but it was tighter than in three previous years.

In 2013, both the levels of the general government’s total expenditures and revenues were 3% higher than a year before. Returns from taxes to the general government budget were 5% higher. For the second consecutive year, revenues from the personal and corporate income tax increased the most (15% in total). Property income underwent a significant fall (decrease of 16%), mostly due to a decrease in dividends. The foreign aid revenues lessened significantly over the year, but for this change it is important to notice the high level of income in 2012 – in 2013, the foreign aid revenues accounted for 405 million euros, 506 million in 2012 and 432 million euros in 2011. There was a considerable change in investments – in 2013, the general government sector spent 154 million euros less for investments than in 2012.

The consolidated debt of the general government (Maastricht debt) rose by 132.7 million euros, reaching 1.8 billion euros by the end of 2013. The local governments as well as the central government contributed to the growth of the debt level. The volume of the long-term securities issued by the central government decreased by 4% and the loan liabilities rose by 8%. The share of foreign debt in the central government’s loan liabilities was nearly 90%.

The Estonian involvement in the European temporary rescue mechanism, EFSF (European Financial Stability Facility) increased by 104 million euros in 2013. At the end of 2013, the liabilities towards the EFSF totalled 458 million euros, of which 80% went for the participation in the rescue package for Greece, 11% for Portugal and 9% for Ireland.

The overall debt level of the local governments grew by 12% compared to 2012. The volume of both short-term and long-term loans increased (15% in total), including the 12% of the loans financed by foreign capital. The volume of the securities other than shares increased slightly as well (7%). Similarly to 2012, social security funds did not contribute to the general government sector debt as at the end of 2013 either.

Surplus/deficit and debt level of the general government in Estonia, 2007–2013

Diagram: Surplus/deficit and debt level of the general government in Estonia, 2007–2013

In Estonia the general government sector comprises three sub-sectors: 1) central government (state budget units and extra-budgetary funds, foundations, legal persons in public law); 2) local governments (city and rural municipality governments with their subsidiary units, foundations); 3) social security funds (Health Insurance Fund, Unemployment Insurance Fund).

Eurostat is going to publish the data on the preliminary debt and deficit levels of the Member States on 23 April.

On 21 May 2013, the European Parliament and the Council adopted Regulation (EU) No 549/2013 on the European system of national and regional accounts in the European Union (ESA 2010). From 1 September 2014, all Member States will change the current methodology, ESA 95, to a new methodology, ESA 2010. Statistics Estonia will publish the usual data for the general government’s deficit and debt levels according to the new methodology on 23 September 2014.