The national film agency, the Estonian Film Foundation, has been told to reduce the 2008 budget of €4.1 million by €20,700 or 0.5% this year and is facing further cuts in 2009. Similar cuts are expected in the two other main financing sources: the Ministry of Culture and the Cultural Endowmnent, which is directly dependent on excise taxes.

The move came as part of a bundle to reduce Estonia's public sector spending in 2008, with the economy stagnating due to a decline in the housing sector. Government financing for film in Estonia had grown steadily in the last decade and has nearly tripled since 2000. The total public financing for film in Estonia was budgeted at €6.75 million for 2008.

Although the cuts appear marginal, the real effect on the emerging film industry is significant for larger film projects already in the pipeline, with inflation expected to reach 10%.