Estonia’s public sector deficit reached €695.8 million in the first half of the year — ERR News
In Estonia, general government sector expenditure exceeded revenue by €695.8 million in the first half of 2026. According to ERR News, over the past four quarters the budget deficit amounted to 1.6% of GDP, while public debt stood at 26.1% of GDP.
Central government deficit
The largest deficit at the end of the second quarter was recorded by the central government, whose expenditure exceeded revenue by €703.9 million. Social security funds ended the second quarter with a deficit of €64.2 million.
Local governments were the only part of the general government sector to post a surplus in the first half of the year. Their surplus amounted to €72.4 million.
Expenditure grew faster than revenue
In the second quarter, general government sector revenue increased by 2.7% compared with the same period in 2025, while expenditure rose by 4.4%. Investment expenditure grew the fastest, by 23.6%, to €851.1 million. This was attributed to investments in national defence and infrastructure.
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Personnel expenditure increased by 8.4%. According to Pauline Kommer, head of the public finance service at Statistics Estonia, this was primarily driven by wage increases in national defence and internal security in line with the state budget.
Consolidated debt stood at €11.3 billion
Estonia’s consolidated public debt, or Maastricht debt, stood at €11.3 billion at the end of the second quarter. Since the end of 2025, it has increased by €1.2 billion, or 12.1%.
Central government debt increased by 12.5%, to €10.8 billion. The total debt of local governments amounted to €1.6 billion, which was 3% lower than at the end of 2025. Social security funds, including the Estonian Health Insurance Fund and the Estonian Unemployment Insurance Fund, made no contribution to consolidated public debt.
Growth in value-added tax and social tax revenue restrained the increase in the deficit. VAT revenue rose by €73.9 million, or 6.9%, in the second quarter, while social tax revenue increased by €71.7 million, or 5.4%.
