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Estonia to Raise Child Benefits to Boost Births After Austerity

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Sept. 21 (Bloomberg) -- Estonia’s ruling coalition agreed to raise child benefits to boost births after austerity in the wake of the European Union’s second-worst recession stoked poverty.

Starting next July, benefits for the first and second children in families deemed to be poor will double, the Reform and Isamaa ja Res Publica Liit parties said yesterday in an e-mailed statement. They’ll rise by two thirds for every additional child, regardless of household income, the parties said.

Prime Minister Andrus Ansip’s government, the only one in the euro area to post budget surpluses for the last two years, has been criticized by the opposition Social Democrats for freezing spending while joining bailouts for richer European nations. The plan will add 5.2 million euros ($6.7 million) to the 2013 budget, Isamaa lawmaker Margus Tsahkna said yesterday by phone.

Estonia passed austerity measures of more than 9 percent of gross domestic product in 2009, exacerbating a slump that wiped almost a fifth off economic output in two years. Ansip has made reversing a declining population his main goal as aging threatens the long-term budget outlook.

Estonia is the poorest euro member with gross domestic product per capita of 9,100 euros last year compared with the 25,900 euro average across the currency region’s 17 countries, according to Eurostat.

The benefits changes will affect about 70,000 children and are in line with recommendations made by the Organization for Economic Cooperation and Development, the parties said.

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

To contact the editor responsible for this story: Balazs Penz at bpenz@bloomberg.net

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