Leaders of parliamentary parties gather on Toompea to resolve state budget debt crisis

On Wednesday, leaders of all parliamentary parties will gather on Toompea to discuss options for resolving the state's debt spiral. Estonia's state debt has grown from €2.5 billion to €10 billion over seven years, and according to Finance Ministry projections, it could exceed €20 billion by 2030. Former Bank of Estonia president Madis Müller has called on parties to sign a long-term cross-party agreement that would send a clear signal to foreign investors and lenders about the reliability of the state's finances.

On Wednesday, 17 June 2026, leaders of all parliamentary parties will gather on Toompea to seek a joint solution to restore the sustainability of Estonia's state finances. The meeting was initiated by the Social Democratic Party chairman Lauri Läänemets.

Debt has quadrupled in seven years

Estonia's state debt has grown from €2.5 billion to €10 billion over the past seven years. According to Finance Ministry projections, if the current trajectory continues, state debt could exceed €20 billion by 2030 and reach 39 per cent of GDP.

Former Bank of Estonia president Madis Müller believes that parties could sign a long-term agreement that would remain in force regardless of who is in power at any given time. In Müller's view, such an agreement would be a clear signal to foreign investors, lenders, businesses, and the country's citizens that Estonia's state finances are trustworthy.

Michal's proposal and Läänemets's position

Prime Minister and Reform Party chairman Kristen Michal supports the idea and proposes writing a provision into the State Budget Act that would require reducing the budget deficit by half a percentage point per year, moving step by step towards a balanced budget.

However, Läänemets, who initiated the meeting, believes that a legislative amendment alone is not sufficient. "We believe this is the most sensible and reliable way, as past practice has shown that any rule written into the State Budget Act can always be changed," said Läänemets. In the Social Democratic chairman's view, the target for state debt could remain in the range of 30-35 per cent of GDP.

Sceptical voices

EKRE chairman Martin Helme is sceptical of a cross-party agreement, though he acknowledges that current budget policy is unsustainable. "This is indicated by the Bank of Estonia, the Finance Ministry in its projections, and the IMF and OECD. However, I don't believe we can reach any political agreement at the moment, because our worldviews and economic philosophies on how to fix things differ greatly," said Helme.

Isamaa chairman Urmas Reinsalu also supports a change of course, but emphasises that the government must take the first step. "The Government of the Republic must take the warnings from international institutions and experts seriously and adjust its policy. We need a budget that reduces public sector spending, and the government must present a clear vision of how to put state finances on a more sustainable path," said Reinsalu.