Estonia has smallest national debt and third largest budget surplus in European Union

Yesterday saw the release by Eurostat of more detailed data on government sector debt and budget deficits in European Union member states in 2006. According to Eurostat, Estonia’s budget surplus is the third largest in the union after Denmark and Finland. The average government sector budget deficit among the 27 member states was 1.6 percent of GDP, while the average debt was 61.4 percent of GDP. The smallest state debt in 2006 was in Estonia.A government sector surplus of between 0.4 and 4.6 percent of GDP could be found in ten European Union member states. Estonia’s was 3.6 percent, making it the third largest after Denmark (4.6 percent) and Finland (3.8 percent). The largest budget deficit was in Hungary, at 9.2% of GDP. Also failing to fulfil the Maastricht criterion in terms of budget balance (with the deficit exceeding 3 percent of GDP) were Italy (-4.4 percent), Portugal (-3.9 percent), Poland (-3.8 percent) and Slovakia (-3.7 percent). The EU’s average budget deficit decreased in 2006 from 2005 by 0.8 percentage points, with Estonia’s surplus growing year-on-year by 1.7 percentage points.

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 favourable macro-economic developments than were expected.

Estonia’s government sector debt fell between 2005 and 2006 from 4.4 to 4.0 percent and was once again one of the lowest in the EU. Luxembourg (6.6 percent of GDP), Latvia (10.6 percent) and Romania (12.4 percent) also had low debt. According to the Maastricht criterion, debt cannot exceed 60 percent of GDP. Failing in this respect were ten countries, with the largest debt being in Italy (106.8 percent of GDP), Greece (95.3 percent) and Belgium (88.2 percent). The EU’s average debt decreased by 1.3 percentage points over the year to 61.4 percent of GDP.

The Statistical Office has released more detailed information about the Estonian government sector budget surplus and debt in its database at http://www.stat.ee.

The Eurostat press release can be viewed at http://epp.eurostat.ec.europa.eu/.
Source: Enterprise Estonia