FISCAL TRANSPARENCY IN ESTONIA

UNCLAS TALLINN 000097 SIPDIS SIPDIS DEPT FOR EEB/IFD/OMA Andrew Snow and Richard Figueroa EUR/ACE Marta Youth EUR/PGI Thomas Cunningham EUR/NB Katherine Garry E.O. 12958: N/A TAGS: EAID ECON PREL EN SUBJECT: FISCAL TRANSPARENCY IN ESTONIA REF: STATE 16737 ¶1. (U) The following information on fiscal transparency in Estonia is provided for use in updating the 2003 country narrative - as requested reftel. -- The Government of Estonia (GOE) has set out transparent policies and effective laws to foster competition and establish "clear rules of the game." -- The main objective of Estonian public financial management is to ensure conditions for stable economic development through fiscal policy. Under the Estonian Constitution, the government is required to establish a balanced budget. -- According to Eurostat, Estonia had the smallest state debt of EU countries in 2006, and Estonia's budget surplus was the third largest in the EU after Denmark and Finland. -- In comparison with previous years, Estonia's government sector surplus has increased considerably both in absolute terms and as a percentage of GDP. In 2004 and 2005, the surplus was 1.8 and 1.9 percent of GDP, respectively. For the first time, all of the levels of the government sector - the central government, social insurance funds and local governments - were in surplus in 2006, mostly due to more favorable macro-economic developments than expected. -- Although the official 2007 statistics are not out yet, the general government budget was also in surplus in 2007, and is expected to be in surplus also in the near future. -- According to Transparency International's 2007 annual Corruption Perceptions Index, Estonia was in 28th place globally among 180 countries and was tied with Slovenia as the least corrupt country in Central and Eastern Europe. -- Estonia's economy is 77.8 percent free, according to Heritage Foundation's 2008 Index of Economic Freedom, which makes it the world's 12th freest economy. Estonia ranked 5th freest out of 41 countries in the European region, and its overall score is much higher than the regional average. -- The state budget is available on the State Budget website: http://riigieelarve.fin.ee/ All revenues and expenditures are included in the publicly available budget and are accurate. -- Estonia's report to the IMF on compliance with standards and codes covering fiscal transparency can be found at:http://www.imf.org/external/pubs /ft/scr/2002/ cr02132.pdf PHILLIPS