Prime Minister Michal: the government will submit a budget of security and prosperity to the Riigikogu

Prime Minister Michal: the government will submit a budget of security and prosperity to the Riigikogu
Photo: Jürgen Randma, Valitsuse kommunikatsioonibüroo

The prime minister emphasised that with these budget decisions, the government is securing Estonia’s freedom, supporting economic growth, and increasing the incomes of the people.

“In drawing up this budget for security and prosperity, we have taken fundamental, far-reaching, and forward-looking steps that seem impossible at first glance – we reduced taxes while increasing defence spending. Another example of this is the simultaneous raise in wages and cuts in budget expenditures.”

The prime minister said that increasing Estonia’s defence spending to an average of over 5% of the GDP within four years means that 2.8 billion euros will be added to defence spending over the next four years.

“In 2026, defence spending will increase by 844.5 million euros compared to 2025. The steeply increasing defence spending will allow us to develop the Estonian air defence faster, increase the army’s firepower, create a deep-warfare capability, and place significant emphasis on the development of drone and electronic warfare, as well as cyber security. It also concerns extensive infrastructure works,” he explained.

Michal stated that the government is guided by the principle that economic growth and increased prosperity are supported by a lower tax burden and a more efficient and flexible state.

“The tax changes will leave approximately 780 million euros in the economy next year. The tax burden in Estonia will decrease by 1.4 percentage points: from 36.6 per cent to 35.2 per cent. This means that the competitiveness of the Estonian economy and business environment will clearly improve. We can think more boldly about making new investments and creating jobs,” said Michal.