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International Internet Magazine. Baltic States news & analytics Friday, 29.03.2024, 15:58

Rõivas to Gurria: OECD recommendations coincide with Estonian government policy

Juhan Tere, BC, Tallinn, 29.01.2015.Print version
At his meeting with Jose Angel Gurria, Secretary-General of the OECD, on Wednesday in Tallinn, Estonian Prime Minister Taavi Rõivas stated that the growth in productivity and lowering labour taxes that are highlighted in the OECD report are also an important part of Estonian Government policy, reports BC the Government Communication Unit.

Jose Angel Gurria and Taavi Rõivas. Tallinn, 28.01.2015. Photo: valitsus.ee

According to Prime Minister Taavi Rõivas, the OECD is a good partner for Estonia, and we take its experiences and recommendations seriously. “Estonia was one of the last entrants to the OECD in 2010 and our objective is to reach the top 34 member states and raise the living standards of Estonians,” said Rõivas.

 

Rõivas said it was positive that the OECD acknowledges Estonia's economic policy decisions and the well-managed public finances. “The report says that the public finances are strong and there is considerable growth potential for the economy, despite the demographic figures,” stated Rõivas. “The report shows Estonia as an intelligent and open country. Our challenge is to move to the next level,” he added.

 

The Prime Minister also said it was positive that the OECD supports the Estonian Government's policy in carrying out structural reforms such as the work capacity reform and school network reform as well as shifting the tax burden from labour and from pollution to the use of resources.

 

There is also a lot of constructive criticism in the report. For example, the OECD refers to the challenges of our economy like low productivity, energy intensity and the mismatch between the preparation of the labour force and the needs of the labour market.

 

The Prime Minister said that Estonia is well aware of these concerns. “Many necessary steps that the OECD has highlighted towards ensuring Estonia's economic development have been taken,” said Rõivas.

 

According to Rõivas, the Government will continue down the chosen path of reducing labour tax burdens, and replacing it with resource use and environmental pollution taxation.

 

To reduce energy intensity, the Government has prepared an increase in the pollution tax level as of 1 January 2017. “It is made for a longer period, to provide assurances in the future for enterprises also,” stated Rõivas, adding that it coincides with the OECD recommendations that Estonia should increase the tax levels of energy sources.

 

The OECD analysis also confirms the importance of large investment projects such as Rail Baltica and the LNG Terminal for Estonia’s economy. “The contribution to research and development and innovation has increased in Estonia very quickly, which could lead to a significant rise in productivity and competitiveness in the future,” said Rõivas.

 

 

However, the OECD recommendations for fiscal policy slightly differ from the existing approaches of the Estonian Government. For example, the OECD recommends allowing a small deficit in the state budget to ensure long term economic growth, but the Government considers it important to keep to its objective of structural balance or surplus to ensure the credibility of the budgetary policy.

 

According to Prime Minister Rõivas, taking a loan is not a taboo subject; at the same time it should not be an aim in itself and it should not be done too lightly and for short-term benefit. “Taking a loan must only be considered when it comes to important investments that have a long-term effect on Estonia’s economy," stated Rõivas.

 

The OECD is an organisation that comprises the most developed countries in the world and its objective is to increase economic prosperity and promote good governance principles. OECD has previously made two thorough analyses about Estonia: the analysis on governance in 2011 and an economic analysis in 2012.






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