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Estonia passes 2017 record level budget spending to bolster defense

TALLINN (Reuters) - Estonia’s parliament voted on Monday to approve a 7.6 percent increase in state budget expenditure for next year, in part to bolster its military amid growing tension in the Baltic region.

Lawmakers set 2017’s defense spending at a record 2.2 percent of GDP or 477 million euros ($498 million), up from 2.07 percent forecasted for 2016. It includes extra spending for hosting NATO troops on rotation in Estonia since tensions rose over Russia’s actions in Ukraine in 2014.

After Russia’s annexation of Crimea, the Baltic Sea states have seen Russia increase the size, scope and frequency of its military exercises and operations in the region, prompting increased military spending by most of the Nordic and Baltic states.

The state budget expenditure will increase by 7.6 percent to see the total nominal government sector deficit hit 0.6 percent of expected GDP in 2017.

Estonia, which joined the euro zone in 2011, is one of few member states forecasted keep within the euro zone’s deficit and debt limits.

The state budget, which takes the biggest share of the public sector account, set expenditure at a record 9.66 million euros next year and has projected revenue intake at 9.48 billion euros.

The Baltic country has no Eurobonds and does not issue domestic debt.

Reporting by David Mardiste; Editing by Johan Ahlander abd