Budget, Estonia, EU – Baltic States, Financial Services, Legislation, Markets and Companies

The Estonian economy has been developing at a good pace and the standard of living has increased, and as a result Estonia will not get the same amount of EU support in the upcoming period as it does in the current budget period. Nevertheless, Estonia is set to receive several times more EU money than it pays into the EU budget also in the upcoming period.

The government supports the increases in the budget in the priority areas put forward by the Commission, as well as the new priorities such as financing of security, defense, external cooperation, and neighborhood policy. At the same time, the government finds that the reduction in the budgets of cohesion policy, rural development and common agricultural policy should not be too big.

The government also is prepared to increase the contribution of Estonia to the EU budget to mitigate the potential cuts suggested by the European Commission to the financing of cohesion policy and agricultural policy. Therefore, the government is in favor of  the size of the new long-term budget being as close as possible to the current one, which means that the budget for 2021–2027 should be bigger than the initial proposal tabled by the Commission.

The position of the Estonian government is that when the standard of living rises the reduction in subsidies should not be as steep as put forward in the current proposal.

While a moderate increase in the rate of own contribution supports well-considered spending of money, the increase in the rate of own contribution for countries becoming a transition region should be smaller and not threefold as suggested in the Commission's proposal. The decisions about what to use EU funding for should be made on the level of regions and considering their development needs.

Just like for Latvia and Lithuania, the transport and energy infrastructure projects connecting all of Europe are of significant importance for Estonia in the budget talks. The government supports the Commission's proposal to go on financing priority cross-border transport projects at a rate of up to 85 percent, in a volume as big as possible.

The Commission's proposals will facilitate and modernize the Common Agricultural Policy. The member states will be given bigger rights to decide about how and where they wish to place their budgetary instruments. The evening off of the levels of direct support among the member states will continue. The sum total to be allocated to Estonia will increase by 26 percent, whereas the total budget of EU direct support will contract by 3.9 percent. According to the Commission's proposal, direct support for Estonian farmers would reach a level of 76 percent of the EU average by the end of the period.

The position of the Estonian government is that direct agricultural support should ensure equal competition conditions on European markets for agricultural producers of all member states. The evening off of the levels of support must happen faster than envisaged in the Commission's proposal, especially considering that the costs of agricultural production in Estonia are higher than in the EU on average.

For the implementation of rural development policy sufficient EU funding must be provided along with a smoother reduction in the rates of support than put forward by the Commission. Rural development policy is the most suitable tool for solving the important challenges to agriculture and to rural regions more broadly, as well as making a contribution to achieving the climate and environment policy goals.

Estonia supports as prompt as possible reaching of agreement both among the member states as well as with the European Parliament so that the transition to the new arrangement in the use of budgetary instruments would be smoother. The proposals of the Commission definitely stand to change in the course of the negotiations, the Estonian government said.