Estonia’s new government is formally appointed. Its first priority is to improve state finances

HELSINKI — Estonia’s president formally appointed the Baltic country’s new government on Monday after lawmakers gave the green light to Prime Minister-designate Kristen Michal’s three-party coalition Cabinet.

Addressing the new Cabinet, which is to be sworn in Tuesday, President Alar Karis said the government’s comfortable majority in the 101-seat Riigikogu, or Parliament, brings along “special responsibility.”

Under a revised government program agreed on Friday, Michal’s first Cabinet will focus on improving Estonia’s ailing state finances, among other things, through hiking income tax and value added tax, in addition to raising the excise tax on alcohol, tobacco and gasoline.

In a 64-27 vote, lawmakers approved the proposed government of Michal, who is a seasoned politician but a first-time prime minister, from the governing center-right Reform Party.

The 49-year-old Michal, who earlier served as climate, justice and economics minister, was tapped to become Estonia’s new prime minister in late June, just days after his predecessor Kaja Kallas was chosen to be the European Union’s new foreign policy chief — a post she will take up later this year.

Kallas, Estonia’s first female head of government, formally resigned a week ago after which Michal started sounding possibilities for a broad-based coalition Cabinet. Following intense talks with parties last week, he decided to stick with the composition of Kallas’ outgoing government with senior partner Reform Party supported by the center-left Social Democrats and the liberal Estonia 200 party.

In addition to finances, the new Cabinet also pledges to continue investing strongly into defense and security in the small NATO nation of 1.3 million that borders Russia to the east.

In the key Cabinet posts, Margus Tsahkna from Estonia 200 will continue as foreign minister and Social Democrat Lauri Läänemets as interior minister. Reform’s veteran politician Jürgen Ligi makes a return to a government post and takes over the finance minister portfolio.

Michal has been active in the Reform Party, Estonia’s dominant party, since the late 1990s. He served as minister for climate affairs in Kallas’ last Cabinet, which took office in April 2023.

Michal also served as Reform’s party secretary and as a member of Tallinn City Council. He is set to take over Reform’s chairmanship from Kallas in the fall.