Prime Minister Michal: Agreement reached on budget prioritising defence, economic and income growth

Prime Minister Michal: Agreement reached on budget prioritising defence, economic and income growth
Photo: Jürgen Randma

Prime Minister Kristen Michal says that the government’s focus in the budget is on defence, the economy and income growth. “We will not give an inch when it comes to safeguarding Estonia’s freedom and independence,” he remarked. “Defence spending will rise to at least 5% of GDP.

“So as to accelerate economic growth, we will not be raising income tax as has been planned for 2026. Alongside reinstating the general tax-free threshold, the overall tax burden will be reduced, meaning that the state will go without around 780 million euros.

“The third target of the budget is to increase incomes, since price rises have narrowed the choices available to people and families in Estonia. Reinstating the uniform tax-free threshold will boost all working people’s incomes, with those earning the average wage receiving in excess of 1800 euros more a year.

“The budget provides for an increase of up to 10% in the salary fund for police officers, rescue workers, teachers and those employed in the field of culture. Pensions will also increase in line with the current index, for which there is money in the budget.”

Minister of Education and Research Kristina Kallas says the most important goal of the budget negotiations was to restore the competitiveness of the Estonian economy. “The crises and uncertainties that recent years have brought have undermined our business environment, and now is the time to re-establish conditions that will give entrepreneurs a sense of security and bring in new investments,” she said.