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Estonian report Estonian report
by Euro Reporter
2009-06-09 08:44:37
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A new finance minister

Estonia's prime minister named a new finance minister to help push through tough budget cuts during a harsh economic downturn and to keep the country on track for euro adoption in two years time. After falling out with former Social Democratic coalition partners, Andrus Ansip leads a minority government. He hopes the small opposition parties will support his budget cuts, but the political uncertainty following the coalition split has made his job more difficult.

The ructions have come just as Estonia faces its biggest post-Soviet recession and worries have grown that the Baltic currency pegs, particularly in Latvia, might not hold. All three countries deny any plans to devalue. Ansip took a step to getting the budget cuts passed as his Reform Party named parliament finance committee head Jurgen Ligi as new finance minister.

"We hope to make these cuts and we have to make these cuts and we will make them. I think we have support in parliament for this," Ligi told Reuters after meeting the president, who has formally to approve his appointment as finance minister. Ansip told Reuters he expected the president would approve Ligi as finance minister after a first reading on Wednesday of the amended 2009 budget, which contains 3.4 billion kroons ($310.5 million) of savings, though the government wants more.

Cuts and snaps is all they can make doesn’t matter how many times they are going to replace the finance minister.


Fuel tax and the Green Party

Marek Strandberg, the head of the Estonian Greens party, announced that the parting is not ready to support an increase in VAT (value added tax) or a rise in income tax, but would instead support an increase in fuel excise taxes.

Of the meeting with Prime Minister Andrus Ansip, Strandberg in their discussions said that supporting enterprises as well as the taxation policy was a viable plan, according to LETA.  “At the moment, we are not prepared to support an increase in the value added tax or in the income tax, as a surge in the value added tax would inevitably paralyse the welfare of low-income households,” said Strandberg.

Strandberg said that the Greens party explained to the Prime Minister their stance on the increase of fuels taxes. “Be those either mining fees on oil shale or mining fees of mineral resources as they could be raised by several times and this increase would not affect poorer households but would distribute this burden much more evenly in the society,” said Strandberg.

You would somehow expect them to be more …green!!!


Another loan for Estonia

The European Investment Bank (EIB) was in Tallinn this week to finalize an 8.6 billion kroon (550 million euros) loan to the Estonian government.  The money will be used to add to the government’s resources in order to obtain larger EU funding. Such funding, which is for numerous projects throughout Estonia, requires a financial commitment from the government.

The EIB explained to The Baltic Times that it offers very competitive lending terms due to its affiliation with the EU and ability to borrow from capital markets at favourable interest rates. Minister of Agriculture Helir-Valdor Seeder said that this loan will most likely not be the last for Estonia, but that Estonia’s loan burden is low compared to those of most EU nations. This in turn, he said, makes lenders more willing to lend money to Estonia. According to Seeder, the loans are earmarked for creating conditions to overcome the current economic crisis.

“At this point maximum use of EU funds is extremely important. The state needs to make investments also in tough times into large projects that are likely to create hundreds of jobs,” Seeder told reporters.
According to plans, Estonia will use approximately one third of the amount for road building and repair projects as co-financing for EU aid.

And how more to ...come?

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