Riigieelarve seadus (RES)

§ 1. Scope of regulation

(1) This Act provides the conditions and procedure for the drafting and passage of the state budget and the use of the funds in the state budget. In addition, the bases for drafting the state budget are provided, pursuant to which the fiscal policy opportunities arising from the state financial forecasts and strategic development documents are followed when drafting the state budget.

(2) To meet the requirements established for drafting the state budget, this Act provides the conditions for the assumption of obligations and the planning of resources by the central government sub-sector entities of the general government sector.

§ 2. General government sector and central government sub-sector

(1) The general government sector shall include the entities specified in paragraph 2.112 of Annex A to Regulation (EU) No 549/2013 of the European Parliament and of the Council on the European system of national and regional accounts in the European Union (OJ L 174, 26.06.2013, p. 1–727).

(2) The general government sector is divided into the central government, local government and social security funds sub-sector. The entities belonging to the central government sub-sector (hereinafter central government) include:

1) governmental authority, state authority agency administered by governmental authority, county court, administrative court and circuit court (hereinafter state authorities);

2) the Chancellery of the Riigikogu, the Office of the President of the Republic, the National Audit Office, the Office of the Chancellor of Justice and the Supreme Court (hereinafter constitutional institutions) and the authorities in their area of administration;

3) legal person in public law, foundation established by the state and company with state participation defined as central government entity pursuant to Regulation (EU) No 549/2013 of the European Parliament and of the Council (hereinafter central government legal persons).

(3) Statistics Estonia shall publish the list of the general government sector entities on its website and inform of the belonging of an entity to the general government sector.

§ 3. Area of government of ministry

(1) For the purposes of this Act, the area of government of the ministry means the ministry together with the state authorities in its area of government.

(2) The provisions of this Act concerning a ministry, the area of government of a ministry and state agencies apply to constitutional institutions and authorities in their area of administration, unless otherwise provided by this Act. A legal instrument which, pursuant to this Act, a minister has the right or obligation to establish, is established by the head of a constitutional institution by an act specific to that institution, taking into account the special rules prescribed for the constitutional institution and unless otherwise provided by law.

(3) The provisions of this Act concerning the ministry and the area of government of the ministry shall apply to the Government Office and the area of administration of the Government Office.

§ 4. Fiscal Council

(1) The Fiscal Council is the advisory board formed pursuant to § 4² of the Eesti Pank Act, which assesses the state macroeconomic forecasts and the state financial forecasts and monitors the compliance with the budgetary rules specified in Chapter 2 of this Act pursuant to the requirements established in this Act and the European Union law.

(2) Where the Government of the Republic disregards an opinion of the Fiscal Council, a respective decision of the Government of the Republic is formalised at the earliest opportunity, but no later than two months after the opinion was submitted. The reasons for the decision are published on the website of the Ministry of Finance.

(3) The Ministry of Finance provides their reasons for disregarding an assessment provided in respect to the state macroeconomic forecast (hereinafter macroeconomic forecast) and the state financial forecast (hereinafter financial forecast). The reasons are published on the website of the Ministry of Finance.

(4) The Fiscal Council publishes its opinions on the website of the Fiscal Council. The Fiscal Council has the right to publish the methodologies and data on which its assessments and opinions are based and to present these opinions to the Finance Committee of the Riigikogu at its request.

(5) The activities of the Fiscal Council are assessed by an independent external assessor appointed by the Supervisory Board of the Bank of Estonia (Eesti Pank) at least once every four years or at the request of the Finance Committee of the Riigikogu. The assessment is submitted to the Supervisory Board of Eesti Pank, presented to the Minister of Finance and the Finance Committee of the Riigikogu, and published on the website of the Fiscal Council.

§ 4¹. Submission of data

The Ministry of Finance has the right to receive necessary data from the ministries and other government sector entities for the preparation of the state budget strategy (hereinafter budget strategy), draft state budget, financial forecasts, and the state medium-term fiscal-structural plan (hereinafter fiscal-structural plan) and its annual progress report, and for monitoring the use and implementation of the state budget.

§ 5. Budgetary position, net expenditure and fiscal policy objective

(1) The budget position of the general government sector is the difference between the total revenue and total expenditure of the general government sector.

(2) The structural budget position of the general government sector is the cyclically adjusted budget position of the general government sector, which does not take into account one-off or temporary transactions.

(2¹) The net expenditure of the general government sector is defined and calculated in accordance with the provisions of Regulation (EU) No 2024/1263 of the European Parliament and of the Council on the effective coordination of economic policies and multilateral budgetary surveillance and repealing Council Regulation (EC) No 1466/97 (OJ L, 2024/1263, 30.04.2024).

(3) The fiscal policy objective of the general government sector is determined on the basis of the provisions of this Act and Regulation (EU) 2024/1263 of the European Parliament and of the Council.

(4) The budgetary framework of the European Union for the purposes of this Act is the system of and principles for coordination of the fiscal policies of the Member States of the European Union based on Articles 121, 126 and 136 of the Treaty on the Functioning of the European Union and Additional Protocol No 12 to that Treaty, and the legal instruments of the European Union established on the basis thereof, including Regulation (EU) No 2024/1263 of the European Parliament and of the Council and Council Regulation (EC) No 1467/97 on speeding up and clarifying the implementation of the excessive deficit procedure (OJ L 209, 02.08.1997, pp. 6–11), and the relevant legal instruments established on the basis of that Treaty.

§ 5¹. Fiscal policy limits

(1) The state budget and budget strategy are drafted in such a way that the budget position and debt of the general government sector are, taking into account the macroeconomic forecast and financial forecast specified in § 15 of this Act, in accordance with the requirements of Additional Protocol No. 12 to the Treaty on the Functioning of the European Union and Regulation (EU) 2024/1263 of the European Parliament and of the Council, and in such a way that the annual net expenditure growth of the general government sector is in accordance with the current fiscal-structural plan prepared on the basis of § 20¹ of this Act.

(2) The state budget and budget strategy are drafted in such a way that the structural deficit of the general government sector does not exceed 0.5 percent of the gross domestic product at current prices in any year, taking into account the macroeconomic forecast and financial forecast prepared on the basis of § 15 of this Act.

(3) Where the ratio of public debt to gross domestic product is below 30 per cent and the risks related to the long-term sustainability of public finances are low, the structural deficit specified in subsection 2 of this section may amount to no more than one per cent of gross domestic product at current prices.

§ 6. Budget position rules for central government legal persons

(2) It shall be ensured by law or on the basis of law that the budget of a central government legal person is drafted and approved in such way that the difference between the operating revenue and expenses during the budgetary year (hereinafter operating result) is in balance or in surplus.

(3) It shall be ensured by law or on the basis of law that the planned operating result of a central government legal person may be in deficit up to 30 per cent of the operating revenue during the budgetary year if the deficit of the operating result is covered from the liquid assets previously accumulated as surplus of the operating result.

(4) The requirement provided for in subsection 2 of this section shall not apply to a central government legal person if the deficit of its planned operating result is related to the foundation, reorganisation or dissolution of the central government legal person envisaged in the scheme of operations or business plan.

(5) The accounting methodology of the operating revenue and the operating expenses of a central government legal person shall be established by a regulation of the minister in charge of the policy sector, taking into account the principles established by Regulation (EU) No 549/2013 of the European Parliament and of the Council.

§ 7. Adjustment mechanism

(1) Where, according to the macroeconomic forecast and financial forecast prepared on the basis of § 15 of this Act, the budget position of the general government sector exceeds the limits provided in § 5¹, then within one month of the publication of the forecast, the minister in charge of the policy sector submits to the Government of the Republic for information an analysis of the state of public finances and, where necessary, proposals for improving the budget position of the general government sector.

(2) Where the deficit of the budget position of the general government sector exceeds the limits provided in § 5¹ of this Act by more than 0.5 percent of gross domestic product (hereinafter GDP), or if, based on the analysis specified in subsection 1 of this section, it is necessary to improve the budget position of the general government sector, the Government of the Republic must, at the earliest opportunity, but no later than when drafting the state budget and budget strategy, implement measures to bring the budget position of the general government sector into line with the limits set out in § 5¹.

(4) The measures specified in subsection 2 of this section shall be implemented in such way that the structural budget position of the general government sector would be improved by at least 0.5 per cent of the GDP in the year when the difference in the structural budget position deficit of the general government sector becomes evident.

(5) Where the measures provided in subsection 2 of this section are insufficient to meet the requirements of the budgetary framework of the European Union, the Government of the Republic implements additional measures to improve the budget position to the extent necessary to bring the state budget and budget strategy into line with those requirements.

§ 9. Exemption clause

(1) Where a general or country-specific escape clause of the European Union applies pursuant to Regulation (EU) 2024/1263 of the European Parliament and of the Council, the implementation of the measures provided in subsections 2 and 21 of § 7 of this Act may be postponed, subject to the conditions of the relevant decision of the Council of the European Union and the provisions of this section. The escape clause may be applied only on the condition that it does not jeopardize the sustainability of public finances in the medium term.

(2) In order to apply the general escape clause of the European Union, the existence and severity of the economic downturn in Estonia in the year of application of the escape clause or the following year must be analysed. The escape clause may only be applied if the economic downturn occurs also in Estonia and it is severe.

(3) An economic downturn is considered to exist and to be severe if, according to the macroeconomic forecast referred to in subsection 1 of § 15 of this Act, real annual GDP growth is negative or real GDP is more than three percent lower than potential real GDP. The minister in charge of the policy sector submits an analysis and proposal for the application of the escape clause together with an analysis of the sustainability of public finances in the medium term to the Government of the Republic.

(4) The Government of the Republic decides on requesting a country-specific escape clause or its extension on the proposal of the minister in charge of the policy sector, in accordance with the requirements of Regulation (EU) 2024/1263 of the European Parliament and of the Council. If a country-specific escape clause is requested due to an economic downturn, the existence and severity of the economic downturn in Estonia in the year the escape clause is requested or in the following year must first be analysed. If a country-specific escape clause is requested or extended for any other reason, the minister in charge of the policy sector submits the reasons for requesting or extending the country-specific escape clause to the Government of the Republic.

§ 10. Net debt rule for central government legal person

(1) It shall be ensured by law or on the basis of law that the difference between the debt obligations and the total amount of the liquid assets of a central government legal person planned as at the end of a budgetary year (hereinafter net debt) may form up to 40 per cent of the operating revenue planned for the same budgetary year throughout the period included in the financial plan submitted on the basis of § 12 of this Act. The Government of the Republic shall decide on the permission to increase the net debt in excess of 40 per cent, taking into account the requirements provided for in this Chapter.

(2) The calculation methodology of the debt obligations and liquid assets of a central government legal person shall be established by a regulation of the minister in charge of the policy sector.

§ 11. Exceptions from budget position and net debt rules

(1) The state budget may, in justified cases, impose additional restrictions on the operating result or net debt of a central government legal person specified in §§ 6 and 10 of this Act. The obligation of a central government legal person to adhere to such restrictions shall be ensured by law or on the basis of law.

(2) The imposition of the additional restrictions specified in subsection 1 of this section shall be permitted if at least one of the following circumstances occurs:

1) the state financial forecast indicates the increase of the budget position deficit of the general government sector during a budgetary year in excess of two per cent of the GDP;

2) the state financial forecast indicates the growth of the debt of the general government sector during a budgetary year in excess of 50 per cent of the GDP;

3) the Government of the Republic is required to implement the measures improving the budget position and specified in subsection 2 of § 7 of this Act.

§ 12. Financial plan of central government legal person

(1) It must be ensured by law or on the basis of law that a central government legal person annually submits a financial plan concerning its current budgetary year, the preceding budgetary year and the next four budgetary years. The data are submitted with the intermediation of the ministry exercising the rights of a founder or the ministry in the corresponding area to the Ministry of Finance by 15 July. If decisions made by the Riigikogu or the Government of the Republic after the submission of data affect the data in the financial plan, the supervisory board of the central government legal person must approve a new financial plan and budget and submit the financial plan with the intermediation of the ministry exercising the rights of the founder or controlling the holding to the Ministry of Finance no later than one month after its approval.

(2) The requirements towards the content of the financial plan and the financial plan submission procedure shall be established by a regulation of the minister in charge of the policy sector.

§ 13. Receipt of additional information from central government legal person

(1) The minister in charge of the policy sector and the minister exercising the rights of a founder or the minister in the corresponding field shall be entitled, for the assessment of the compliance with the budgetary rules provided for in this Chapter, to receive from a central government legal person the relevant information.

(2) The minister exercising the rights of a founder or the minister in the corresponding field shall be entitled, for the assessment of an application for the receipt of support from the state budget and the inspection of the use of the support, to receive from a central government legal person the relevant information.

(3) The minister in charge of the policy sector shall receive the information with the intermediation of the minister exercising the rights of a founder or the minister in the corresponding field.

§ 14. Monitoring of compliance with budgetary rules

(1) The Fiscal Council gives its opinion on:

1) the fiscal policy objectives of the general government sector presented in the budget strategy before the budget strategy is approved;

2) the compliance of the expenditure growth reported in the progress report on the fiscal-structural plan with the net expenditure trajectory, and on the reasons for possible deviations, at the request of the Minister of Finance, before the progress report is submitted to the European Commission;

3) the fulfilment of the state fiscal policy objectives in the previous budgetary year no later than 30 days before the approval of the budget strategy;

4) the compliance of the net expenditure growth presented in the fiscal-structural plan with the requirements of Regulation (EU) 2024/1263 of the European Parliament and of the Council prior to the approval of the plan.

(2) The opinion is prepared in accordance with the requirements set out in this Chapter, including the requirements of Additional Protocol No 12 to the Treaty on the Functioning of the European Union and Regulation (EU) No 2024/1263 of the European Parliament and of the Council, as well as the need to adjust the budget position.

§ 14¹. Assessment of functioning of budgetary framework of state

The Fiscal Council assesses the functioning of the budgetary framework of the state described in this Chapter at least once every four years or at the proposal of the Finance Committee of the Riigikogu.

§ 15. Macroeconomic forecast and financial forecast

(1) The objective of the macroeconomic forecast is to describe the state economic environment together with the likely developments and to inform the public thereof.

(2) The macroeconomic forecast provides the basis for the financial forecast which describes the revenue, expenditure and investments of the general government sector together with the likely changes. The financial forecast provides the basis for the fiscal-structural plan and its progress report, budget strategy and draft state budget.

§ 16. Requirements for macroeconomic forecast and financial forecast

(1) The macroeconomic forecast and the financial forecast shall be prepared annually with regard to the current budgetary year and the following four years, relying on the latest known data series. The data used as the external environment prerequisites for the macroeconomic forecast and the financial forecast shall not be older than two months by the intended publication date of the forecast.

(2) The alternative assumptions used in the preparation of the macroeconomic forecast and the financial forecast shall be based on how exact the previous forecasts have been, and the relevant risk scenarios shall be taken into account. The macroeconomic forecast shall present in addition to the baseline scenario at least one risk scenario, and its potential impact on the accrued revenue and balance of the state budget shall be assessed. The financial forecast shall be prepared on the basis of the most likely or a more conservative scenario of the macroeconomic forecast.

(3) The macroeconomic forecast and the financial forecast shall contain a sensitivity analysis, which explores how the main fiscal variables are formed on the basis of various economic growth and interest rate forecasts.

(4) In the explanatory memorandum on the macroeconomic forecast and the financial forecast, the forecast is compared to the most up-to-date forecasts of the European Commission and other independent institutions, and the material differences are described and substantiated.

§ 17. Preparation of macroeconomic forecast and financial forecast

(1) The Ministry of Finance shall prepare the macroeconomic forecast and the financial forecast pursuant to the requirements provided for in this Act and the European Union law.

(2) The officials or employees preparing the macroeconomic forecast and the financial forecast shall be independent in the preparation of the forecast and choosing the methods of preparation.

§ 18. Evaluation and publication of macroeconomic forecast and financial forecast

(1) The Fiscal Council shall provide an opinion regarding the macroeconomic forecast and the financial forecast within two weeks as of their publication. The Ministry of Finance shall justify disregarding the opinion of the Fiscal Council publicly within two weeks as of the publication of the opinion of the Fiscal Council.

(2) The Ministry of Finance shall publish the macroeconomic forecast and the financial forecast on its website immediately after the preparation of the forecast.

§ 18¹. Ex post evaluation of macroeconomic forecast and financial forecast

(1) The Fiscal Council regularly, but at least once every three years, evaluates the accuracy of macroeconomic and financial forecasts based on objective criteria in order to identify possible systemic deviations. The Fiscal Council publishes its evaluation and the Ministry of Finance takes the results into account when preparing future macroeconomic forecasts and financial forecasts.

(2) The Ministry of Finance presents, where necessary, an overview of the measures required to eliminate systemic deviations from the macroeconomic forecast and financial forecast.

§ 19. Strategic development documents

(1) The strategic development documents are the long-term development strategy of the state, general principles of policy, sectoral development plan and programme.

(1¹) The long-term development strategy of the state is a development document which determines the comprehensive vision for policy areas, national strategic goals and significant changes required for implementing them for at least 15 years.

(2) The general principles of policy is a development document which determines the vision, national objective and priorities for one or several interrelated policy areas.

(3) The sectoral development plan is a development document which comprehensively determines the general objective and sub-objectives for one or several policy areas and the indicators providing an opportunity to measure these, and the policy instruments through which it is planned to achieve the established objectives.

(5) The programme is a development document which determines the measures, indicators, activities and financing scheme targeted at the achievement of a sub-objective of a performance area. The indicators must be directly linked to the objectives of the programme and be periodically measurable in order to assess the effectiveness and efficiency of the use of funds in the state budget.

(6) The strategic development documents shall be mutually consistent.

(7) The constitutional institutions are not required to prepare the strategic development documents.

§ 20¹. Fiscal-structural plan

(1) The medium-term budgetary objectives in accordance with sections 5 and 5¹ of this Act are confirmed in the fiscal-structural plan submitted by the Government of the Republic to the Council of the European Union and the European Commission. The plan is published on the website of the Ministry of Finance.

(2) The fiscal-structural plan is prepared at least once every four years, in accordance with the requirements of Regulation (EU) 2024/1263 of the European Parliament and of the Council and the fiscal policy limits set out in § 5¹ of this Act.

(3) Where the last year of validity of the fiscal-structural plan coincides with the year of regular elections to the Riigikogu, the minister in charge of the policy sector submits the budgetary objectives of the fiscal-structural plan to the Government of the Republic for approval no later than four months before the beginning of the next budgetary year, and the Government of the Republic approves the plan no later than two months before the beginning of the next budgetary year.

(4) The Fiscal Council provides an assessment of the macroeconomic forecast underlying the net expenditure growth in the fiscal-structural plan and its macroeconomic assumptions before the plan is submitted to the European Commission. The Ministry of Finance must provide their reasons for disregarding the assessment. The reasons are published on the website of the Ministry of Finance.

§ 20². Progress report on fiscal-structural plan

The implementation of the fiscal-structural plan is described in a progress report prepared annually in accordance with the requirements of Regulation (EU) 2024/1263 of the European Parliament and of the Council. The progress report is published on the website of the Ministry of Finance.

§ 20³. Fiscal risk report

As part of the budgetary framework of the state, the Ministry of Finance regularly compiles a fiscal risk report to assess risks that may threaten the sustainability of public finances and inclusive and sustainable growth in the medium and long term. When assessing risks, estimates of the macro-fiscal risks associated with climate change and their distributional effects are taken into account where possible, and the risks associated with emergencies or other similar situations and contingent liabilities are also assessed.

§ 25¹. Content of budget strategy

(1) The budget strategy determines the main directions of the state fiscal policy and records the general objectives of the Government of the Republic, which are intended to be implemented during the budget strategy period, and the funds planned for the implementation (hereinafter financing scheme). The budget strategy is prepared each year with regard to at least the next year and the following three years (hereinafter budget strategy period).

(2) The basis for the financing scheme is the financial forecast.

(3) The budget strategy shall include on a yearly basis:

1) the state economic situation analysis based on the macroeconomic forecast and the financial forecast;

2) the forecast of the major items of revenue and expenditure of the general government sector, which is based on the assumption that the policy will not be changed;

3) the state fiscal policy objectives, including the budget position of the general government sector and the expected amount of debt;

4) a description of the policy shifts, including reforms and investments, that will achieve the state fiscal policy objectives;

5) an assessment of the effect of the planned policy shifts on the general government financing in the medium term and the long-term sustainability of the public finances;

6) the provisional budget position of the sub-sectors of the general government sector or entities included therein and other financial information together with significant changes in the financing and financial management principles;

7) the allocation to the area of government of a ministry of the maximum volumes of funding planned for the performance areas during the budget strategy period;

8) the comparison between the previous and updated budget strategy if the policy objectives have changed compared to the previous budget strategy;

9) the planned investments;

10) the forecast of the liquid assets and debt of the general government sector, including the forecast of the changes in the state assets, liabilities and net assets (budgetary balance sheet);

11) the forecast of the state cash flow;

12) the funds requested by the constitutional institutions, with the exception of investments in immovables, to the extent approved by the Finance Committee of the Riigikogu in the light of the macroeconomic forecast;

13) the planned foreign support.

(3¹) The description specified in clause 4 of subsection 3 of this section is presented by major items of revenue and expenditure of the general government sector and it provides a comparison of the impact of policy shifts with the forecasts specified in clause 1 of the same subsection, which assumes that there will be no policy shifts. Policy shifts that affect public finances and sustainable and inclusive economic growth are highlighted separately.

(4) If an emergency situation, state of emergency or state of war exists during the preparation of the budget strategy, the Government of the Republic may comply with the provisions of subsection 3 of this section partially, while justifying it in the budget strategy.

§ 26. Content of state budget

(1) The state budget is the annual financial plan of the state which records the funds (hereinafter funds) which the state plans to accumulate, receive as support, intermediate and use during the budgetary year.

(2) In the state budget, the funds shall be classified on the basis of the budget classification administratively between the areas of government of the Chancellery of the Riigikogu, Office of the President of the Republic, National Audit Office, Office of the Chancellor of Justice, Supreme Court and the ministries.

(3) The administrative classification shows which areas of government of the ministries accumulate, receive as support, intermediate or use the state budget funds. In the administrative classification, the Government of the Republic may also be mentioned with regard to the funds to be used by the Government of the Republic.

(4) According to economic content, the state budget funds shall be divided into revenue, expenditure, investments and financing transactions based on the following:

1) revenue means all the funds, which the state accumulates or receives as support in the performance of its functions;

2) expenditure means the funds used by the state, which are neither investments nor financing transactions;

3) investments mean the funds planned for the acquisition and renovation of tangible and intangible assets;

4) financing transactions mean the transactions with financial assets or liabilities where, on a double-entry basis, both entries are made in the financial assets or liabilities and as a result of which the budget position does not change.

(5) In the state budget, the expenditures are classified on the basis of performance areas and programme activities.

(5¹) In the state budget, the expenditures of the area of government of a ministry are broken down administratively by state agencies or groups thereof. The expenditures of the programme activities and constitutional institutions within the area of government of the ministry are broken down on the basis of economic content into staff and management costs, social benefits, other benefits and other costs, distinguishing between interest on public debt, transferable tax costs, and, starting from one million euros, estimated costs arising from the law.

(6) The classification of the budget of constitutional institutions under subsection 5 of this section shall be decided by the Government of the Republic on the initiative of each constitutional institution.

(7) Investments with the cost of ten million euros or more are classified on the basis of investment objects in the state budget.

(8) The budget of the areas related to state secret is classified pursuant to subsections 5, 5¹ and 7 of this section to the extent which is not at variance with the State Secrets and Classified Information of Foreign States Act and legal instruments established on the basis thereof.

§ 27. Budgetary year

(1) The state budget shall be drafted with regard to one budgetary year.

(2) The budgetary year shall begin on 1 January and end on 31 December.

§ 28. Structure of state budget

(1) The following shall be presented in the state budget:

1) the consolidated budget of the state budget funds;

3) the classification of the state budget funds.

(2) The State Budget Act shall stipulate the provisions which are to be submitted pursuant to an obligation arising from the legislation or which are related to the regulation or conditions of the accumulation, receipt as support, intermediation or use of the state budget funds during the budgetary year.

(3) The State Budget Act shall not stipulate the provisions for the amendment or repeal of another Act.

§ 29. Budget classification

(1) The budget classification comprises the detailed breakdown of the funds and the accounting policies and concepts used in budgeting, financial management and strategic planning.

(4) The budget classification shall be established by a regulation of the minister in charge of the policy sector.

§ 31. Additional breakdown of expenditure, investments and financing transactions

(1) The Government of the Republic shall break down the investments in immovables of the area of government of the ministry specified in the state budget by properties. The Government of the Republic may break down other investments, expenditure and financing transactions of the area of government of the ministry specified in the state budget in compliance with the budget classification.

(2) The minister breaks down the funds of the area of government of the ministry specified in the state budget administratively and according to economic content in the budget of the area of government at least in accordance with the mandatory planning detail established pursuant the budget classification and following the breakdown of the Government of the Republic established on the basis of subsection 1 of this section.

(3) The constitutional institutions and the authorities in their area of administration shall break down the funds specified in the state budget according to economic content or based on activity in their budget in compliance with the budget classification.

§ 32. Funds with and without limits and transferable tax

(1) The state budget funds are divided into the funds with and without limits. No restrictions shall be imposed by the state budget on the amount of liabilities assumed on account of the funds without limits.

(2) The funds without limits include:

1) the expenditure, investment and financing transaction, the possibility of making which depends on the accrual of specific revenue (hereinafter funds depending on revenue);

2) the expenditure, investment and financing transaction, the amount of which arises from law (hereinafter estimated funds);

3) revenue;

4) non-monetary income and expenses.

(3) The taxes, fees or other charges planned in the state budget both as revenue and expenditure, which the state collects and transfers to a person designated by legislation (hereinafter transferable tax), shall be transferred to the beneficiary according to actual revenue.

(4) A limit shall be established on the use of the funds with limits under the State Budget Act.

§ 33¹. Preparation of budget strategy

(1) The budget strategy shall be prepared by the Ministry of Finance.

(2) The information concerning the coming years provided in the budget strategy for the previous period shall be amended upon the approval of the new budget strategy only in case the general objective of a performance area, the action programme of the Government of the Republic, the main directions of the state fiscal policy, the macroeconomic forecast, financial forecast or relevant legislation have changed.

(4) An application for the allocation of the funds from the state budget to a legal person in public law shall be submitted by the ministry with whose area of competence the activities of the corresponding legal person in public law are mainly connected, among the data submitted for preparation of the budget strategy and the state budget.

(5) The conditions and procedure for preparation of the budget strategy and the state budget shall be established by a regulation of the Government of the Republic.

§ 34. Bases for compilation of draft state budget

The draft state budget is compiled on the basis of the budget strategy and the latest financial forecast.

§ 34¹. Budget strategy and approval of state budget

(1) The Government of the Republic approves the budget strategy and the draft state budget considering that these must be submitted to the Riigikogu not later than three months before the beginning of a budgetary year.

§ 34². Spending review

(1) For the productive and efficient use of public funds and enhancing the flexibility of the functioning of the state, the Government of the Republic may prepare the spending review in planning the state budget funds.

(2) The spending review shall make specific proposals for more influential, efficient and economical use of the state budget funds.

(3) The conditions and procedure for preparation of the spending review shall be established by a regulation of the Government of the Republic.

§ 35. Budget project for area of government of ministry

(3) The opinion of the Council for Administration of Courts regarding the conformity of the funds planned for the county courts, administrative courts and circuit courts to the principles of the formation of annual budgets of courts shall be enclosed to the budget project of the Ministry of Justice and Digital Affairs.

§ 37. Legislative proceeding of draft state budget by Government of the Republic

(3) In case of any changes in the amount of the funds prescribed in the draft state budget for the county courts, administrative courts or circuit courts, the Government of the Republic shall submit the made changes together with the opinion of the Council for Administration of Courts in the explanatory memorandum to the draft state budget.

§ 38. Submission of draft state budget to Riigikogu

(1) The Government of the Republic shall submit the draft state budget together with the explanatory memorandum to the Riigikogu not later than three months before the beginning of the budgetary year.

(2) The draft state budget submitted to the Riigikogu shall conform to the published legislation and the draft legislation initiated by the Government of the Republic in the Riigikogu prior to the submission of the draft state budget. The submitted draft state budget may take into account the amendments made during the legislative proceeding in the Riigikogu in the draft legislation initiated by the Government of the Republic in the Riigikogu.

(2¹) The draft state budget submitted to the Riigikogu must include the funds requested by the constitutional institutions, with the exception of investments in immovables, to the extent approved by the Finance Committee of the Riigikogu in the light of the macroeconomic forecast.

§ 39. Legislative proceeding of draft state budget in Riigikogu

The Riigikogu shall conduct the legislative proceeding of the draft state budget on the basis of the Riigikogu Internal Rules and Rules of Procedure Act with the specifications arising from this Act.

§ 40. Motions to amend draft state budget

(1) The initiator of a motion for amending the draft state budget, which would have the effect of decreasing estimated revenue or increasing or reallocating expenditure, investment or financing transaction, shall append financial calculations specifying the necessary sources for covering expenditure.

(2) A motion to amend the draft state budget shall not cause a structural state budget deficit, an increase in the state budget deficit or a decrease in the structural state budget surplus.

§ 41. Passage of state budget

The Riigikogu shall pass a state budget as an Act.

§ 42. Incurring expenditure if state budget is not passed by beginning of budgetary year

(1) If the Riigikogu has failed to pass the state budget by the beginning of the budgetary year, the area of government of a ministry, prior to the passage of the state budget, can make expenditure, investments and financing transactions each month of the new year within up to one-twelfth of the corresponding expenditure, investment or financing transaction in the state budget for the previous year on the condition that the expenditure, investment or financing transaction:

1) is also prescribed in the draft state budget for the new year and

2) does not exceed one-twelfth of the amount of the corresponding expenditure, investment or financing transaction prescribed in the draft budget for the new year.

(2) If the Riigikogu has failed to pass the state budget by the beginning of the budgetary year, the rates and limits established for the previous year based on the State Budget Act shall apply until the passage of the state budget.

(3) If, during a state of war, the Riigikogu has failed to pass the state budget by the beginning of the budgetary year, the Government of the Republic shall decide on the implementation of the draft state budget submitted to the Riigikogu until the passage of the state budget by the Riigikogu. In such case, prior to the passage of the state budget by the Riigikogu, the expenditure, investments and financing transactions made on a monthly basis shall not exceed in total one-twelfth of the expenditure, investments and financing transactions in the state budget for the previous year.

§ 43. Amendment of state budget

(1) In order to amend the state budget without amending the total amount of funds, the Government of the Republic may initiate a draft State Budget Amendment Act not later than two months before the end of the budgetary year.

(2) The Ministry of Finance shall compile a draft State Budget Amendment Act together with the explanatory memorandum.

(3) The submission, deliberation and passage of a draft State Budget Amendment Act shall be conducted pursuant to the procedure provided for in §§ 39 and 40 of this Act.

§ 44. Supplementary budget

(1) In order to amend the state budget amending the total amount of funds, the Government of the Republic may initiate a draft supplementary budget not later than three months before the end of the budgetary year.

(2) The Ministry of Finance shall compile a draft supplementary budget together with the explanatory memorandum.

(3) The submission, deliberation and passage of a draft supplementary budget are conducted pursuant to the procedure provided for in §§ 39 and 40 of this Act, taking into consideration the requirements provided in subsection 2¹ of § 38 of this Act.

§ 46. Connection between state budget and local government budgets

(1) The state budget grants support to local governments:

1) from the equalisation fund;

2) from the support fund;

3) for supporting specific activities or investment case-by-case.

(2) Before preparing the budget strategy and draft state budget, the representatives of local authorities and of the national association of local authorities and the representatives of the Government of the Republic hold negotiations with the objective to agree on the following issues:

1) the amount and principles of receipt of transferable taxes;

2) the principles of distribution, conditions of use, principles of formation of amount, and the amounts of support specified in clauses 1 and 2 of subsection 1 of this section for the budget strategy period and budgetary year;

3) the principles of covering the expenses of the state functions imposed on a local government by law;

4) the methodology of recording the information specified in clauses 1 and 2 of this subsection in the budget strategy and the draft state budget;

5) the measures for ensuring financial discipline and, where necessary, the measures for improving the consolidated budget position of local authorities.

(3) The agreements achieved on the issues specified in subsection 2 of this section shall be recorded in the budget strategy, draft state budget, draft Act or other legislation. The Government of the Republic shall decide on the issues where no agreement is reached upon the preparation of the budget strategy and the draft state budget.

(4) The minutes concerning the agreements entered into during the negotiations and the parties' disagreements shall be enclosed to the budget strategy or the explanatory memorandum to the draft state budget.

(5) The budget strategy shall provide the information concerning the provisional amounts of the taxes transferable to the local governments and the support granted from the equalisation fund and the support fund.

(6) If, after the beginning of a budgetary year of a local authority, the Riigikogu or the Government of the Republic enacts legislation related to the tasks of the local authority, on the basis of which the budgetary revenue of the local authority decreases or its expenditure increases in the current budgetary year, the state compensates the local authority for the additional expenses incurred as a result of the enactment of the legislation to the same extent or reduces the obligations imposed on the local authority proportionally. Compensation is not paid if, as a result of the enactment of the legislation, the budgetary revenue of the local authority decreases or its expenditure increases by less than 1000 euros.

(7) The additional expenses incurred in connection with the enactment of the legislation referred to in subsection 6 of this section is not compensated if the legislation of the Government of the Republic has been enacted on the basis of an agreement between two or more local authorities or if the expenses are not compensated on the basis of an agreement between the representatives of a national association of local authorities and the Government of the Republic.

§ 47. Equalisation fund

(1) The size of the equalisation fund and principles of distribution thereof are determined by the state budget or by another Act.

(2) The objective of the equalisation fund is, without determining the conditions of using the funds, to harmonise the opportunities for performance of the functions of the local governments. The distribution of the equalisation fund shall use as the basis the income tax and land tax received by a local government, the number of residents of a local government and other specifications of a local government.

(3) The distribution of the equalisation fund between the local governments shall be established by an order of the Government of the Republic.

§ 48. Support fund

(1) The size of the support fund and the types of support included therein shall be determined in the state budget.

(2) The support fund means the support granted to local authorities for the use pursuant to the purposes and conditions provided by law, which is distributed only based on the figures.

(3) The figures providing the basis for the distribution of the support fund are provided by law.

(4) The conditions and procedure for the distribution and use of the support fund are established by a regulation of the Government of the Republic.

(5) The Government of the Republic shall establish, by a regulation specified in subsection 4 of this section, also the figures providing the basis for the distribution of the support fund if the support fund includes support with the duration of one year determined in the state budget, and the figures providing the basis for the distribution thereof are not provided by law.

(6) The distribution of the support fund between the local governments shall be established by an order of the Government of the Republic.

§ 49. Payments from equalisation fund and support fund

(1) The rules for the execution of payments established on the basis of subsection 4 of § 64 of this Act shall provide the conditions and procedure for the payment of support and making the advance payments of support assigned to a local government on the basis of subsection 3 of § 47 and subsection 6 of § 48 of this Act.

(2) Unless the Government of the Republic has established the distribution specified in subsection 3 of § 47 and subsection 6 of § 48 of this Act by the beginning of a budgetary year, local authorities are paid each month, until the distribution is established, up to one-twelfth of the amount allocated for the same purpose in the previous budgetary year on the basis of the distribution approved by the Government of the Republic, taking into account the amount planned in the state budget for the current budgetary year or the amount planned in the draft state budget, unless the state budget for the current year has been passed.

§ 50. Case-by-case support

(1) A ministry grants targeted case-by-case support to a local authority and to a unit under its dominant influence for investments or operating expenses from the funds prescribed for the area of government of the ministry by the state budget.

(2¹) The minister may establish, by a regulation, the conditions and procedure for granting case-by-case operating support, providing at least the objective of granting the support and the principles for its distribution.

(3) The minister may establish, by a regulation, the conditions and procedure for granting case-by-case investment support, providing at least:

1) the objective of granting the support;

2) the activities supported;

3) the principles for distribution of or application for the support;

4) in case an application is submitted, the principles for assessment of the application;

5) the procedure for making payments of the support.

(4) The case-by-case investment support is granted from the state budget to a local authority and to a unit under its dominant influence on the following conditions:

1) the supported investment must generally contribute to fulfilling the sectoral objective in the development plan of the local authority;

2) the development plan and the budget strategy of the local authority must comprise at least the period specified by law;

3) when contributing to the self-financing, the local authority must be able to ensure the self-financing, taking into account the financial discipline measures on the conditions prescribed by law.

§ 51. Covering of expenses of state function

(1) The basis for covering the expenses of a state function imposed on a local authority by law (hereinafter state function) shall be the average calculated expenditure or actual expenditure.

(2) If the expenses of a state function are covered on the basis of the figures provided by law, the principles of calculation of average expenditure or compensation for actual expenditure shall be determined by a regulation specified in subsection 4 of § 48 of this Act.

(3) The minister may establish by a regulation:

1) the principles of calculation of average expenditure or compensation for actual expenditure in covering the expenses of a state function;

2) the procedure for submission and processing of applications for covering the expenses.

(4) The rates of compensation to cover the expenses of a state function for each budgetary year are determined by the state budget.

(5) The funds granted for covering the expenses of a state function shall be planned in the state budget.

(6) The explanatory memorandum to the draft state budget shall provide the information regarding the amount of funds granted for covering the expenses of each state function and the provider thereof.

§ 52. Use of support fund and case-by-case support

Unless the provider of support has prescribed repayment of the unused funds of the support fund or case-by-case support to the state, the local authority may use these in the next budgetary year for the same purpose.

§ 53. Prerequisites for use of state budget funds

(1) The area of government of a ministry shall have the right to use the state budget funds for the intended purpose and only in case the corresponding funds are prescribed in the budget and unless otherwise provided by this Act.

(2) The area of government of a ministry shall have the right to use the state budget funds only within the same budgetary year, unless otherwise provided by this Act or the state budget.

(2¹) In case of activity based breakdown, the minister shall be entitled to change the volumes of the funds with limit between the programmes to the extent of up to five per cent of the volume of indirect costs in the expenditure model of the area of government, but not more than 0.25 per cent of all the funds with limit of the area of government. Restriction on making amendments shall be calculated separately for each program.

(5) The funds depending on revenue may be used after the accrual of the revenue, excluding the case provided for in subsection 1 of § 54 of this Act.

(6) A state authority may use the foreign support funds received for the compensation for the made expenses and the foreign support co-financing funds for the purpose of the funds, which were used for making the compensated expenses.

§ 53¹. Granting of domestic project-based support

(1) The conditions and procedure for granting domestic project-based support on account the funds of the area of government of a ministry, including the organisation of the call for applications, the use of support and reporting, and the recovery of funds granted as support or the balance thereof, unless such conditions and procedure derive from another legal instrument, are established by a regulation of the minister in charge of the policy sector.

(1¹) Domestic project-based support is generally granted through an open call for applications in accordance with the development documents of the area of government for the targeted financing of expenditures and investments. In exceptional and justified cases, national project-based support may be granted by decision if the minister has established the principles for granting such support by the regulation specified in subsection 1 of this section.

(2) The minister may authorise a state foundation or a foundation established with state participation, a local authority or a foundation or non-profit association established by the latter to carry out an administrative duty related to implementation of the conditions for granting domestic project-based support on account the funds of the area of government of a ministry, without applying subsections 2 and 3 of § 5, subsections 1 and 2 of § 6 or subsection 1 of § 14 of the Administrative Co-operation Act. Section 13 or subsection 3 of § 14 of the Administrative Co-operation Act do not apply to entry into such an administrative contract.

§ 53². Granting of domestic operating support

(1) The minister has the right to grant domestic operating support on account the funds of the area of government in the cases provided by law or in the cases provided in this section for activities included in the development documents of the area. A constitutional institution may grant domestic operational support if it is related to its tasks and lines of action.

(2) A central government legal person may be a recipient of domestic operating support, unless otherwise provided by law. Domestic operating support is granted to the recipient based on the objectives set out in its development documents and the tasks specified in its articles of association.

(3) The principles and procedure for the distribution of domestic operating support from the budget of the area of government of the ministry to the central government legal persons operating in the same area of activity, unless such principles and procedures derive from another legal instrument and if there is more than one central government legal person operating in the same area of activity, are established by a regulation of the minister in charge of the policy sector.

(4) The provisions of this section do not apply to the payment of membership fees paid by constitutional institutions and areas of government of ministries for participation in domestic and international organisations.

§ 53³. Granting of domestic social support

(1) Domestic social support, the granting whereof is not provided by any other Act or legal instrument, may be granted to a natural person under this Act on account the funds of the area of government of a ministry if it is related to the activities of the area of government contained in the development documents of the area and funds have been prescribed for this purpose in the budget of the area of government.

(2) For the purposes of this section, scholarships or grants within the meaning of subsection 7 of § 19 of the Income Tax Act and awards are considered domestic social support. For the purposes of this section, the variable salary specified in subsection 5 of § 61 of the Civil Service Act is not considered an award.

(3) The conditions and procedure for granting domestic social support on account the funds of the area of government of the ministry are established by a regulation of the minister in charge of the policy sector.

(4) A constitutional institution establishes the principles for granting social support and publishes them on its website.

§ 54. Use of foreign support and foreign support co-financing funds prior to receipt thereof

(1) A state authority may use the foreign support and the foreign support co-financing funds, upon the consent of the Ministry of Finance, prior to the receipt thereof.

(2) If a state authority has made payments on account of the funds specified in subsection 1 of this section in a larger amount than the foreign support or the foreign support co-financing funds will be received, the state authorities or its superior ministry, and in case of payments made by the intermediary of the foreign support a ministry whose area of responsibility includes the performance of the function of the payment of the corresponding foreign support, shall cover the remaining amount from the budget funds of the state authorities or the area of government of the ministry or apply for the covering of the deficit from the reserve fund of the Government of the Republic.

(3) The procedure and conditions for the use of the funds specified in subsection 1 of this section shall be established by the minister in charge of the policy sector in the rules for the execution of payments established on the basis of subsection 4 of § 64 of this Act.

§ 55. Use of budget for domestic project-based support, domestic operating support, and foreign support co-financing

(1) The provider of domestic project-based support and operating support, as well as of the co-financing funds provided in the state budget, must ensure that the recipient of the support or co-financing funds undertakes to use the support or funds received only for the purpose and under the conditions determined by the provider of the support or funds.

(2) Unlawful and misused state aid is recovered on the basis and in accordance with the procedure provided in § 42 of the Competition Act, unless otherwise deriving from European Union law, without applying the provisions of this Act.

(3) The recipient of domestic project-based support undertakes to return any unused balance of the support to the provider. If the balance is not returned, the provider of the support recovers the support from the recipient.

§ 55¹. Recovery of domestic project-based support

(1) The provider of domestic project-based support may partially or fully revoke the decision to grant support and, depending on the severity of the violation, recover it, either partially or fully, if it becomes apparent that the recipient of the support:

1) has knowingly submitted false information when applying for or using the support, has fulfilled the conditions for receiving or using the support ostensibly, and there has been criminal fraud, fraud, corruption, or a conflict of interest in the use of the support, or a circumstance has come to light in the case of which the application for support would not have been approved;

2) has not fulfilled the requirements on which the payment of the support was based;

3) has not fulfilled their obligations related to receiving the support, either partially or fully;

4) liquidation or bankruptcy proceedings have been initiated against the recipient of the support.

(2) The minister may establish, by a regulation specified in subsection 1 of § 53¹ of this Act, the rates of recovery of domestic project-based support and the specifying or other grounds for recovery of the support.

(3) Recovery of domestic project-based support on the grounds specified in subsection 1 of this section may be waived if:

1) it is not possible to use the support for its intended purpose due to force majeure or other circumstances beyond the control of the recipient of the support;

2) the recipient of the support has discovered and notified the provider of the support at the earliest opportunity that they have been reimbursed for expenses that are not covered by the support, and has returned the support or part thereof in the manner specified in the conditions for granting the support;

3) the amount of support to be recovered is 1000 euros or less, except in the circumstances specified in clause 1 of subsection 1 of this section.

(4) A decision to recover domestic project-based support may be made within four years from the date of the last payment for the project, unless otherwise provided by law. The support must be repaid within 60 days of receiving the relevant decision. In exceptional and justified cases, the provider of the support may extend the term for repayment of the support at the request of the recipient and defer repayment, requiring collateral where necessary.

(5) If the domestic project-based support is not repaid or offset by the due date of repayment of the support, the recipient of the support must pay late interest at the rate of 0.06 percent for each calendar day of delay in repaying the support. The calculation of late interest ceases when the amount of late interest exceeds the amount of the recoverable support on the basis of which it is calculated. The late interest may be reduced by the decision to recover the support in justified cases, but adequate compensation for damage must be ensured.

(6) In the case of deferral of repayment of domestic project-based support, the recipient of the support pays interest from the day following the due date specified in the second sentence of subsection 4 of this section. The interest rate on the balance of the amount of the support to be repaid is the six-month Euribor plus three percent per annum. The six-month Euribor is calculated as of the banking day preceding the day of making the decision to defer the repayment of the support. Interest is calculated on the basis of a 360-day period. In the event of a negative Euribor, cumulative interest rates of less than one percent are not applied.

(7) No late interest or interest is charged from state agencies.

(8) A decision to recover domestic project-based support is an enforceable title within the meaning of clause 21 of subsection 1 of § 2 of the Code of Enforcement Procedure.

§ 55². Processing of personal data upon processing of applications for support

(1) When processing an application for support on the basis of §§ 53¹–53³ of this Act, the following personal data are processed:

1) the general data and current account of the applicant for the support;

2) data on the health, ethnic origin, education, and work experience of the natural person applying for the support, where such data are necessary under the conditions for granting the support in order to determine the right to apply for and receive the support.

(2) Personal data processed upon the processing of applications for support are retained for five years from December 31 of the year in which the application was rejected or the final payment was made to the recipient of the support, unless otherwise provided by state aid rules. The retention period for personal data is suspended for the duration of any judicial proceedings.

§ 56. Amendments to use of state budget funds

(1) The distribution of the funds determined by the state budget may be amended only by an amendment of the state budget or a supplementary budget, unless otherwise deriving from this Act or the state budget.

(2) The Government of the Republic shall have the right to amend the breakdown of the following funds determined in the state budget:

1) the funds related to foreign support and co-financing;

2) the funds of the area of government of the Ministry of Defence for financing participation in an international military operation;

3) the funds of the area of government of a ministry related to the reorganisation or dissolution of a state authority in the area of government of a ministry;

4) the investment objects in the area of government of a ministry, without exceeding the funds prescribed for investments in the state budget.

(2¹) The minister is entitled to change the classification of the funds with a limit determined in the state budget to the extent and on the conditions provided in the state budget.

(2²) The minister is entitled to amend the breakdown of the budget of state agencies or groups thereof for the funds with limit of the area of the area of government of the ministry as determined by the state budget, and the detailed breakdown of the economic content of the programme activities, without exceeding the scope and conditions provided in the state budget for changing the funds by the limit of the programme activities of the area of government.

(2³) A constitutional institution is entitled to amend, without altering the total amount thereof, the breakdown of the economic content of the funds with limit determined by the state budget, presented in accordance with subsection 5¹ of § 26 of this Act.

(2⁴) The ministry and the constitutional institution immediately notify the Finance Committee of the Riigikogu of the amendments to the budget made pursuant to subsections 2² and 2³ of this section and the reasons therefor.

(4) The Government of the Republic shall have the right, upon the reorganisation or dissolution of a state authority, to assign the amounts unused by the state authority which will be reorganised or dissolved to the reserve fund of the Government of the Republic. The subsidies, revenue received from the economic activities of the authority and revenue received from the sale of inventories and fixed assets shall not be assigned to the reserve fund of the Government of the Republic.

(5) If upon the reorganisation or dissolution of a state authority the functions of the authority are not assigned to another state authority, the unused subsidies, revenue received from the economic activities and revenue received from the sale of inventories and fixed assets of the reorganised or dissolved state authority shall be assigned to the state revenues.

§ 58. Use of funds in reserve fund of Government of the Republic

(1) The funds in the reserve fund of the Government of the Republic may be used for unforeseeable expenditures and investments which cannot be planned in the legislative proceeding of the draft state budget. The state budget provides for a reserve fund of the Government of the Republic, constituting up to three percent of the total amount of state budget expenditures and investments.

(1¹) The reserve fund of Government of the Republic may provide dedicated funds for financing activities approved by the Government of the Republic.

(2) The Government of the Republic decides on the allocation of the funds from the reserve fund of the Government of the Republic. Upon allocation of funds, the Government of the Republic determines the performance area in which the funds will be used.

(3) The procedure for the allocation of the funds from the reserve fund of the Government of the Republic and the use of the allocated funds shall be established by a regulation of the Government of the Republic.

(4) The Government of the Republic has the right, by a regulation specified in subsection 3 of this section, to authorise the minister in charge of the policy sector to decide on the allocation of the dedicated funds. The minister in charge of the policy sector may allocate funds only for the purposes designated by the Government of the Republic.

(5) The unused balance of the reserve fund of the Government of the Republic is not transferred to the next budgetary year.

§ 59. Organisation of receipt of revenue

The revenue shall be received in the liquid financial assets of the state, unless otherwise provided by law.

§ 59¹. Transfer of state budget funds

(1) The transfer of the state budget funds is the extension of the term of using the state budget funds by one budgetary year (hereinafter transfer).

(2) The transferred funds of the state budget may be used for the purpose determined by the state budget. The distribution of the state budget funds to be transferred between the performance areas and programme activities and the main breakdown of the administrative and economic content presented pursuant to § 5¹ of § 26 of this Act may be amended upon transfer if this is related to transformation or dissolution of a state agency in the area of government of the ministry, or amendment of a performance area or programme activity.

(2¹) The Government of the Republic shall decide on extending the term for using the funds allocated for resolving an emergency situation, state of emergency or state of war and alleviating the impact thereof, for the following budgetary year. The Government of the Republic has the right to authorise the minister in charge of the policy sector to decide on the use of any unused funds by the regulation set out in subsection 3 of this section.

(3) The conditions and procedure for transfer of the state budget funds shall be established by a regulation of the Government of the Republic.

§ 60. Assumption of obligations

(1) A state authority shall have the right to assume obligations only in case if the funds have been designated thereto for the performance of the obligation in the state budget or in a budget approved on the basis thereof.

(2) Unless otherwise provided by this Act, a state authority shall be prohibited to:

1) assume debt obligations for the state;

2) grant state guarantee or other collateral;

3) grant a loan;

4) make donations;

5) acquire financial assets, excluding participation in legal persons in private law by the state on the basis of the State Assets Act;

6) conclude transactions under finance lease, award concession contracts and conclude other such transactions, unless the state budget has granted an authorisation therefor.

(3) When granting the authorisation specified in clause 6 of subsection 2 of this section, the state budget shall determine:

1) the objective of the transaction;

2) the amount of the obligation assumed for the state, the amount of payments due in one budgetary year and the conditions for changing the amount of payments;

3) the term of obligation assumed for the state;

4) other essential conditions of the transaction.

(4) A minister may permit the state authorities in the area of government of a ministry to assume financial obligations for the upcoming budgetary year provided that in no upcoming budgetary year the amount of the financial obligations performed by the area of government of the ministry shall exceed 50 per cent of the funds with limit of the financing scheme for the corresponding upcoming budgetary year of the area of government of the ministry.

(5) On the proposal of the minister in charge of the policy sector, the Government of the Republic may increase the maximum rate of the assumption of financial obligations of the area of government of a ministry for the upcoming budgetary year, which is provided for in subsection 4 of this section, but not more than to 80 per cent of the funds with limit of the financing scheme for the corresponding upcoming budgetary year of the area of government of the ministry. The state budget may provide the Government of the Republic with the right to permit the assumption of financial obligations by the area of government of the ministry in an amount exceeding the provisions of this subsection.

(6) The constitutional institutions and the authorities in their area of administration shall follow subsection 4 of this section in the assumption of financial obligations for the upcoming budgetary years, unless otherwise determined by the state budget.

(7) The Riigikogu shall decide, for the resolution and prevention of a financial crisis that may cause difficulties related to liquidity or solvency for the financial institutions or significant disruptions in the payment and settlement systems, on the acquisition of shares and other holdings, and other financial assets and on the assumption of obligations or conclusion of financing transactions related to the amounts paid for the ensuring of financial stability of a foreign state, eurozone or a Member State thereof in an amount exceeding the provisions of the state budget. After the adoption of a resolution, the Government of the Republic shall submit to the Riigikogu a draft state budget amendment or a draft supplementary budget. The legislative proceeding of a draft state budget amendment or a draft supplementary budget shall not hinder the implementation of the resolution of the Riigikogu.

§ 61. Loan granted by state and state guarantee

(1) The state may grant a loan or state guarantee:

1) for the performance of public duties;

2) to a financial institution or to secure the obligations of a financial institution in order to resolve or prevent a financial crisis that may cause difficulties related to liquidity or solvency, or significant disruptions in the payment and settlement systems;

3) to the persons specified in subsection 1 of § 67 of this Act, whose money is kept and invested by the state, or to secure their obligations;

4) to a company or to secure the obligations of a company, if the state has a majority interest in the company and if it is necessary to secure the interests of the state in the participation in such company;

5) for the ensuring of financial stability of a foreign state, eurozone or a Member State thereof;

6) for ensuring the performance of the obligations of the Guarantee Fund.

(2) Granting a loan by the state shall mean granting the amount of money or credit based on a loan agreement or credit contract at the disposal of another person or acquisition of bonds issued by the borrower.

(3) A state guarantee shall mean a guarantee or other collateral granted by the state on the basis of this Act or another Act, excluding a short-term loan on securities specified in subsection 1 of § 69 of this Act and a collateral granted for the purpose of the financial risk management in the conclusion of derivative transactions related to the debt obligations of the state specified in subsection 4 of § 70 of this Act.

(4) The Riigikogu grants a loan or a state guarantee on the proposal of the Government of the Republic, otherwise provided by law. The Government of the Republic may grant a loan or on the basis of this Act a state guarantee in the amount determined pursuant to subsection 5 of this section to the persons specified in subsection 4¹ or to secure their obligations.

(4¹) The Government of the Republic may grant a loan or on the basis of this Act a state guarantee for a term of up to 30 years in the year to the extent of the maximum permitted balance determined by the state budget to the following persons located or operating in Estonia or to secure their obligations:

1) legal persons in public law;

2) companies in which the state has a majority interest;

3) foundation established by the state;

4) financial institutions.

(4²) The minister in charge of the policy sector may grant a loan on the basis of an overdraft agreement to a foundation established by the state, which is located or operating in Estonia, to the extent of the maximum permitted balance determined by the state budget and the maximum amount of loan for up to three years.

(5) In the determination of the maximum permitted balances specified in subsections 4¹ and 4² of this section, the amount of the granted loans, guarantees and support to be repaid, and the forecasted need of granting these shall be taken into account.

(6) The interest rate on a loan granted by the Government of the Republic and the minister in charge of the policy sector is the interest rate at which the state would be able to assume debt obligations on similar terms at the time of entering into the loan agreement, plus an additional risk margin which is determined taking into account the credit risk of the person and the term of the loan.

(8) Following the resolution by the Riigikogu or the Government of the Republic on granting a loan or on the basis of this Act of a state guarantee, the Ministry of Finance shall enter into the contracts necessary for granting the loan or state guarantee, conclude the transactions and organise the performance thereof.

(9) The procedure and specific conditions for applying for and granting of a loan and on the basis of this Act a state guarantee shall be established by a regulation of the Government of the Republic.

§ 62. Resolution on granting state guarantee and loan

(1) A resolution on granting a state guarantee shall contain at least the following information:

1) the recipient of the state guarantee or the guaranteed person;

2) the intended purpose or objective of the state guarantee;

3) the amount and currency of the state guarantee;

4) the term of the state guarantee;

5) the state guarantee premium.

(2) A resolution on granting a loan shall contain at least the following information:

1) the borrower;

2) the intended purpose or objective of the loan amount;

3) the size of the loan amount;

4) the term of the loan;

§ 63. Grant of repayable support to profit-making state agency

(1) The Ministry of Finance shall have the right, on account of the maximum permitted balance of loans and state guarantees granted by the Government of the Republic and specified in subsection 5 of § 61 of this Act, to grant repayable support to a profit-making state agency.

(2) The amount of the repayable support specified in subsection 1 of this section and the specific conditions and procedure for the payment and repayment thereof, and the amount of remuneration paid for the use of the support and the specific conditions and procedure for the payment thereof shall be decided by the minister in charge of the policy sector.

§ 67. Keeping and investment money of other persons

(1) The Ministry of Finance shall have the right, on the basis of law or contract, to keep and invest the money of legal persons in public law, legal persons in private law founded by the state or with state participation and legal persons in private law carrying out administrative duties of the state, to execute the payments and settlements of the persons and intermediate in the payment services thereto.

(2) The Ministry of Finance shall have the right to use the money kept pursuant to subsection 1 of this section, but the Ministry shall provide the persons specified in subsection 1 of this section with an opportunity to make payments at all times on account of the funds owned by them for the performance of the functions imposed thereon by the legislation. Subsection 6 of § 64 does not apply to the making of payments. The rules for the execution of payments specified in subsection 4 of § 64 of this Act shall apply to the execution of the payments and settlements of the aforementioned persons and intermediation in the payment services thereto.

(3) A state authority shall have the right to keep the money of another person in the case, under the conditions and pursuant to the procedure provided by law. Subsection 6 of § 64 does not apply to the making of payments of a person specified in this subsection.

(4) The Ministry of Finance shall manage the state cash flow and the cash flow related to the keeping and investment of the money of the persons specified in subsections 1 and 3 of this section on the basis of the principles specified in subsection 5 of § 66 of this Act as an integral whole, balancing the positive and negative cash flows of the persons.

§ 68. Performance of contingent liabilities

(1) The minister in charge of the policy sector shall organise the performance of the financial obligations arising from the state guarantees granted on the basis of this Act on account of the liquid financial assets of the state.

(2) The minister in charge of the policy sector shall organise the due payment of the holding contributed at the request of the international financial institutions in which the state is a member or partner or the due performance of the financial obligations arising from the bonds issued by the state thereto on account of the liquid financial assets of the state, unless otherwise provided by law.

(3) The Government of the Republic or, with the authorisation of the Government of the Republic, the minister in charge of the policy sector shall decide on the performance of such financial obligations not specified in subsection 1 of this section and arising from the security provided by the state and court judgments and rulings, for which no funds are prescribed in the state budget and which cannot be performed on account of the funds in the reserve fund of the Government of the Republic, on account of the liquid financial assets of the state.

§ 69. Debt obligations of state

(1) The debt obligations of the state for the purposes of this Act shall mean the loans, overdrafts, short-term loans on securities taken, bonds issued and repurchase agreements of securities entered into for the management of the state cash flow.

(2) The maximum permitted balance of the debt obligations of the state shall be determined by the state budget.

(3) When determining the maximum permitted balance of the debt obligations of the state, the following shall be taken into consideration:

1) the balance of loans taken;

2) the necessity to finance the state budget expenditure, investments and financing transactions;

3) the necessity to perform and refinance the debt obligations of the state;

4) the potential necessity for granting loans;

5) the probability of the realisation of the contingent liabilities of the state.

(4) The maximum permitted balance of the debt obligations of the state determined by the state budget shall not apply upon the assumption of debt obligations during a state of war.

(5) The Riigikogu shall decide on the assumption of debt obligations for the state for the purpose of the acquisition of shares and other holdings, and other financial assets for the resolution and prevention of a financial crisis that may cause difficulties related to liquidity or solvency for the financial institutions or significant disruptions in the payment and settlement systems, or for the refinancing of debt obligations, or for the ensuring of financial stability of a foreign state, eurozone or a Member State thereof, in an amount exceeding the maximum permitted balance of the debt obligations specified in subsection 2 of this section. After the adoption of a resolution, the Government of the Republic shall submit to the Riigikogu a draft supplementary budget or a draft state budget amendment. The legislative proceeding of a draft supplementary budget or a draft state budget amendment shall not hinder the implementation of the resolution of the Riigikogu.

§ 71. Stabilisation Reserve Fund

(1) The Stabilisation Reserve Fund shall mean the financial reserve formed from the state funds in order to finance such expenditure, investments and financing transactions, which objective is:

1) the reduction of economic risks;

2) the prevention or mitigation of socio-economic crises;

3) the resolution or prevention of an emergency situation, a state of emergency, a state of war or other extraordinary situation or a crisis with material effect, or performance of the obligations provided for in a collective self-defence agreement;

4) the resolution and prevention of a financial crisis that may cause difficulties related to liquidity or solvency for the financial institutions or significant disruptions in the payment and settlement systems.

(2) The following shall be transferred to the Stabilisation Reserve Fund:

1) funds available therefor in the state budget;

2) funds to be entered in the Stabilisation Reserve Fund pursuant to a resolution on the distribution of the state unconsolidated cash flow surplus;

3) revenue received from the privatisation of state assets pursuant to law;

4) appropriations made to the state budget from the profits of Eesti Pank;

5) revenue received from administration of the Stabilisation Reserve Fund;

6) other funds provided by law.

§ 73. Use of funds of Stabilisation Reserve Fund

(1) A resolution on the use of the funds of the Stabilisation Reserve Fund shall be adopted by the Riigikogu on the proposal of the Government of the Republic. After the adoption of a resolution, the Government of the Republic shall submit to the Riigikogu a draft supplementary budget or a draft state budget amendment. The legislative proceeding of a draft supplementary budget or a draft state budget amendment shall not hinder the implementation of the resolution of the Riigikogu.

(2) In case of an extensive or rapid economic decline or at the time of a financial crisis, or in case of compensation for deposits provided in the Guarantee Fund Act, the Ministry of Finance may, upon the consent of the Government of the Republic, use for up to six months the securities purchased on account of the funds of the Stabilisation Reserve Fund to secure the debt obligations of the state, or grant a loan to the Guarantee Fund provided that the funds are returned with interest. The Ministry of Finance immediately notifies the Riigikogu about making a decision to use such right.

§ 74. Reporting on Stabilisation Reserve Fund

(1) The Ministry of Finance shall, not later than on the tenth working day of each quarter, submit a report to the National Audit Office, the Government of the Republic and the Finance Committee of the Riigikogu on the composition and value of the assets of the Stabilisation Reserve Fund as at the last working day of the previous quarter.

(2) The report specified in subsection 1 of this section shall set out at least the following:

1) the market value of the funds of the Stabilisation Reserve Fund and the change in the value compared to the end of the quarter preceding the accounting period and the beginning of the accounting year;

2) the contributions to and payments from the Stabilisation Reserve Fund as summary amounts;

3) the return of the Stabilisation Reserve Fund;

4) the overview of the investment structure of the Stabilisation Reserve Fund by financial assets, major issuers and credit institutions, credit ratings, currency and sectors;

5) the average duration of the Stabilisation Reserve Fund investments.

(3) The Ministry of Finance shall publish the report specified in subsection 1 of this section on its website after the session of the Government of the Republic where the report was discussed.

§ 75. Supervision over implementation of state budget

The Ministry of Finance shall monitor the implementation of the state budget and provide an overview thereof to the Government of the Republic at least twice a year.

§ 76. Financial control system

(1) The financial control system is part of the internal control system, which comprises the planning, use and monitoring of use of the budget funds of a state authority. The objective of the financial control system is to ensure the economical, efficient, effective, legitimate and transparent use of the state budget funds.

(2) The head of a state authority shall be responsible for the implementation and efficiency of the financial control system.

§ 77. Annual reports of state and auditing thereof

(1) The annual reports of the state shall mean the annual reports of the National Audit Office and the consolidated annual report of the state. The reports shall be prepared according to the Accounting Act.

(2) The National Audit Office shall perform the audit of the annual accounts constituting part of the consolidated annual report of the state. The National Audit Office shall verify the lawfulness of the transactions of the state.

(3) An audit firm appointed by the Riigikogu pursuant to the National Audit Office Act shall audit the annual accounts and verify the lawfulness of the transactions of the National Audit Office.

(4) The National Audit Office may, in the course of an audit or verification of the lawfulness of the transactions specified in subsection 2 of this section, rely on the provisions of the report of a sworn auditor documented for the purposes of § 54 of the Auditors Activities Act in the audit of the annual accounts of the state consolidation group entity or on the basis of the verification of the lawfulness of the transactions.

§ 79. Audit and submission to Riigikogu of consolidated annual report of state

(1) The Ministry of Finance shall submit the consolidated annual report of the state to the National Audit Office not later than by 30 June of the year following the accounting year. The report submitted to the National Audit Office shall be published on the website of the Ministry of Finance immediately after the submission of the report. In the course of an audit, the Ministry of Finance may correct and amend the report.

(2) The National Audit Office shall complete the audit of the annual accounts of the consolidated annual report of the state and the verification of the lawfulness of the transactions not later than by 31 August of the year following the accounting year.

(3) The Ministry of Finance shall submit the consolidated annual report of the state together with a draft resolution regarding the distribution of the state unconsolidated cash flow surplus and the audit report of the National Audit Office published with regard to the audit of the annual accounts of the consolidated annual report of the state and the verification of the lawfulness of the transactions to the Government of the Republic for approval within seven working days as of the receipt of the report from the National Audit Office and publish the report on its website immediately after the submission to the Government of the Republic. The Government of the Republic shall submit the approved consolidated annual report of the state to the Riigikogu for approval together with a draft resolution regarding the distribution of the state unconsolidated cash flow surplus. The audit report of the National Audit Office shall be enclosed to the consolidated annual report of the state.

(4) A resolution regarding the distribution of the state unconsolidated cash flow surplus shall be prepared pursuant to the provisions of the Accounting Act.

§ 80. Implementation of §§ 20, 48 and 60 of this Act

(1) A regulation issued on the basis of subsection 2 of § 10 of the State Budget Act in force until the entry into force of this Act shall be effective shall be effective after the entry into force of this Act in so far as it is not in conflict with this Act, until the revocation thereof by a regulation specified in subsection 5 of § 20 of this Act.

(2) A regulation established on the basis of subsection 4 of § 48 of this Act shall be applied to the distribution of the funds of the support fund planned for the area of government of a ministry in the state budget as of 1 January 2017.

(3) Subsection 3 of § 60 of this Act shall apply for the first time with regard to the 2015 State Budget Act.

§ 81. Special rules related to state budget for 2014

(1) As of the entry into force of this Act, subsection 12 of § 2 and §§ 4, 6–10, 12, 14 and 16 of the 2014 State Budget Act shall not apply.

(2) The maximum permitted total balance of the debt obligations of the state specified in subsection 2 of § 69 of this Act in 2014 shall amount to 2,500,000,000 euros.

(3) The maximum permitted balance of loans and state guarantees granted by the Government of the Republic and specified in subsection 5 of § 61 of this Act in 2014 shall amount to 610,000,000 euros.

§ 81¹. Special rules related to state budget for 2020

(1) Subsection 5 of § 33¹ of this Act shall apply for the first time with regard to the 2020 State Budget Act.

(2) The wordings of § 25¹, subsections 1, 2, 3, 5 and 6 of § 26, subsections 2 and 3 of § 29, § 30, subsections 2 and 3 of § 31, subsection 4 of § 32, §§ 33¹, 34, 34¹, 34² and 35–37, subsection 3 of § 38 and subsections 1 and 1¹ of § 58 of this Act entering into force on 1 January 2020 shall apply for the first time with regard to the 2020 State Budget Act.

§ 81². Establishment of support measures for alleviation of crisis relating to spread of coronavirus causing COVID-19 disease

(1) The general conditions for the support measures established due to the emergency situation on the basis of § 53¹ of this Act shall be established by a regulation of the Government of the Republic.

(2) The minister shall establish the support programmes due to the emergency situation on the basis of § 53¹ of this Act in adherence to the general conditions referred to in subsection 1 of this section.

§ 81³. Establishment of support programmes for alleviation of crisis relating to spread of coronavirus causing COVID-19 disease

(1) The general conditions of the support programmes for alleviation of crisis relating to the spread of coronavirus causing COVID-19 disease shall be established by a regulation of the Government of the Republic.

(2) The minister shall establish the support programmes for alleviation of crisis relating to the spread of coronavirus causing COVID-19 disease in adherence to the general conditions referred to in subsection 1 of this section.

§ 81⁴. Special rules related to state budget for 2022

The wordings of subsections 5, 7 and 8 of § 26 of this Act entering into force on 15 December 2021 apply for the first time with regard to the classification of the state budget for the year 2022.

§ 81⁵. Special rules related to state budget for 2025

(1) Subsections 5¹, 5² and 8 of § 26 of the wording of this Act adopted on 20 November 2024 apply with regard to the breakdown of the state budget for the year 2025.

(2) Subsection 5 of § 58 of the wording of this Act which entered into force on 29 December 2025 applies for the first time with regard to the state budget for the year 2025.

§ 81⁶. Special rules related to state budget for 2026

(1) Subsections 5¹ and 8 of § 26, subsections 1, 2² and 2³ of § 56 and subsection 1 of § 58 of the wording of this Act which entered into force on 29 December 2025 applies for the first time with regard to the state budget for the year 2026.

(2) Domestic support is planned in the state budget for 2026 in accordance with the guidelines for the preparation and submission of a draft budget strategy for the area of government of the ministry issued on the basis of the regulation established pursuant to subsection 5 of § 33¹ of this Act.

§ 81⁷. Special rules related to granting domestic support

(1) The domestic support provided in this Act is planned for the first time in the state budget for 2027 by the types of support provided in this Act.

(2) The granting of domestic support without a basis deriving from this Act or another legal instrument and the granting of domestic support on the basis of this Act is brought into conformity with the wording of this Act which entered into force on 29 December 2025, no later than on 31 December 2026, except in the case provided in subsection 3 of this section.

(3) The wording of this Act and of the regulation established on the basis hereof which were in force before 29 December 2025 is applied to the pending procedures for granting support that are carried out on the basis of the regulation of the minister in charge of the policy sector established before 29 December 2029 on the basis of subsection 1 of § 53¹ of this Act, to the use of such support, and the reporting and control thereof.

§ 82

–

§ 125

[Omitted from this text.]

§ 126. Entry into force of Act

(1) Subsection 3 of § 47, subsections 4–6 of § 48 and § 49 of this Act enter into force on 1 January 2015.

(2) Subsections 2 and 3 of § 50 and § 51 of this Act enter into force on 1 January 2017.

(3) Sections 108 and 120 of this Act enter into force on 1 January 2019.

(4) Subsection 3 of § 48 and § 110 of this Act enter into force on 1 January 2020.