Rich neighbours force price increase

There is little good news for consumers in terms of prices since the food basket alone has appreciated 17.5% in the last 12 months and an end to rising prices is nowhere to be seen yet., says Marje Josing, head of the Economic Research Institute (EKI), writes Postimees daily.

According to Josing, the booming economies of rich Scandinavian countries have helped Estonian economy to recover quickly, but it has come at a price of higher inflation.

“Estonian price level will remain relatively high in comparison to the people’s income. We have rich neighbours and usually there is conversion towards higher prices. Since we are getting significant investments and many tourists from them, such price conversion is very natural,” she added.

 Josing said that when producers get more money by selling the product not at home, but abroad, that it what they will do.
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Budgetary receipts to surpass target by 80 MEUR this year

According to a fresh forecast by the Estonian Finance Ministry, about 80 million euros more is due to be received in budgetary revenues this year than was forecast at the time of drafting of this year’s state budget in fall 2010.

Sven Kirsipuu, adviser at the department for state finance and strategy at the Finance Ministry, told reporters on Monday that the factors behind the improved revenue intake are higher receipts of social tax and VAT and higher-than-expected receipts from the sale of carbon credits, or assigned amount units (AAUs).

The fresh forecast suggests that receipts of the state budget in 2011 will reach 5.936 billion euros, 7.3% more than last year. Receipts in 2012 are estimated to total 5.963 billion kroons, while in 2015 the state budget is estimated to take in 6.446 billion euros.

While in 2010 the general government budget had a small surplus, then this year it will have a gap of 0.4% and next year a gap of 2.8%. The shortfall is largely caused by investments made with receipts from the sale of AAUs and resumption of contributions by the state into second pillar pension schemes.

Source: Estonian Review