Estonia Budget Gap May Shrink More Than Planned on Tax Revenue, Ansip Says

Estonia’s budget deficit may shrink more than forecast after tax receipts reached a record percentage of the government’s annual revenue plan last month, Prime Minister Andrus Ansip said.

Tax revenue was about 68 percent of the full-year forecast as of Aug. 29, “a level we have never had before at this time,” Ansip said at a news conference today in Tallinn, the capital. “Based on tax collection in August, we may exceed the annual tax plan.”

Estonia in July received approval from the European Union to adopt the euro next year. The Baltic nation will probably cut its budget deficit to 1.3 percent of gross domestic product this year from 1.7 percent in 2009, the Finance Ministry forecast last month. Among eurozone members, only Finland and Luxembourg met the EU’s 3 percent limit last year.

Still, one-time deficit-reduction measures, including proceeds from the sale of spare United Nations carbon credits and savings from putting pension contributions on hold, will amount to 2.6 percent of GDP this year, the ministry said. That compares with 0.9 percent of GDP last year, the ministry said.

To contact the reporter on this story: Ott Ummelas in Tallinn at oummelas@bloomberg.net

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