TALLINN, Dec 10 (Reuters) - Estonia's parliament on Wednesday passed a 2009 budget with a small deficit, but a senior parliamentarian said the gap was actually much higher and the country would have to cut further or borrow to cover it.
Estonia has prided itself on fiscal rigour and has little state debt. But a recession has hit revenues hard. Neighbour Latvia has had to appeal to the IMF and EU for help.
The 2009 budget passed by parliament showed a deficit of 700 million kroons ($57.86 million), but the head of parliament's finance committee said the actual funding hole was bigger.
"The budget has a deficit of several billion kroons," said Jurgen Liigi, a member of senior coalition party the Reform Party, which is led by Prime Minister Andrus Ansip. Ansip has insisted the budget is basically in balance.
The discrepancy has arisen as the 2009 budget just passed is based on an old forecast of growth next year of 2.6 percent. But the new forecast is for a GDP fall next year of 3.5 percent, implying a revenue drop of 5 billion kroons.
Liigi said cuts would have to be made.
"The budget should have been cut by 6 billion, but it was technically impossible. The problem is ahead of us and we have to cut more and use reserves," he added to Reuters.
The Social Democratic Party, one of the three coalition parties and of which Finance Minister Ivari Padar is a member, said Estonia had to consider borrowing.
"Given what we know today, covering the deficit by bonds is better for the state purse than tapping into reserves," Baltic news agency BNS quoted the group as saying in a statement.
Former Finance Minister Taavi Veskimagi told Reuters the deficit could hit 10 billion kroons, but saw no need to borrow.
"The first option is that the government must come back to parliament and make a new negative additional budget in February or March and cut expenses. After that, we can use our reserves, which are more than 10 percent of GDP," Veskimagi said.
Padar has himself raised the idea of borrowing, though the Finance Ministry has said there is no need for IMF funds.
An IMF team is currently in Estonia holding regular Article 4 discussions with the authorities. (Reporting by David Mardiste; Editing by Ron Askew)