ABSTRACT
This chapter investigates how the expenditure cuts materialised, how the cutbacks decisions were met and implemented, and what have been the implications of cutting back. It demonstrates that cutbacks posed extensive burdens to the central government and the operational measures of single government organisations. The chapter provides an overview of the implementation of cutbacks in the Estonian central government. It examines the shifts in decision-making processes during the cutback era: increased power of politicians and budgetary institutions, changes in organizational arrangements, and increased responsibility of individual civil servants. The chapter investigates the response of the Estonian government to the recent fiscal crisis. It demonstrates that after the outburst of the crisis the government undertook radical and straightforward cutback measures both on the expenditure and revenue side of the budget, repeatedly introducing negative supplementary budgets. It concludes that the general retrenchment environment helped the government to carry out reforms that had been turned down earlier.
