Errors in Estonia's state budget caused by rushing

The 'super-ministry' building in Tallinn, home of the justice ministry and several others.
The 'super-ministry' building in Tallinn, home of the justice ministry and several others. Source: Siim Lõvi /ERR

The errors highlighted by the National Audit Office this week in the state budget prepared by the Ministry of Finance are mainly a result of the work processes at the ministry and lack of time, the ministry's Deputy Secretary General Sven Kirsipuu and Sven Sester, a former minister of finance have said.

"One of the biggest problems in the process of preparing budget documents is shortfalls in the information system," Sester, vice chairman of the Riigikogu economic affairs committee and former two times finance minister, told ERR.

According to Sester, the drafting of the state budget and the explanatory memorandum is largely unautomated, which means that while the government often makes decisions up until the last minute before the budget is submitted to the Riigikogu, officials have only a few days to make corrections to the draft and the explanatory memorandum and get them approved.

"And these corrections have to be made manually," Sester said.

The minister of each field would check whether the amounts allocated to them are correct, but aside from the Ministry of Finance, the consolidated numbers do not have a so-called interested bystander who would check over the calculations, the Isamaa MP explained.

Also Sven Kirsipuu, deputy secretary general for budget policy at the Ministry of Finance,  attributed the errors in the budget process to specifics in the organization of the process. 

"In 2019, we were preparing for a complex reform to move to an activity-based state budget. In the background, this meant a much larger volume of data and more complex methodologies and models. Unfortunately, the risk of errors due to the massive reform, manual work and rush was realized," the official said. 

According to Sester, the Ministry of Finance should review its internal work processes.

"Knowing how many sleepless nights the entire budget department of the Ministry of Finance spends after the government's last-minute political decisions are made, my advice would be to streamline the process and make the budget picture clearer to avoid similar mistakes in the future," he said.

Kirsipuu meanwhile said that the ministry identified the errors highlighted by the National Audit Office already last year and, as a result, its management structure has been changed this year to alleviate what he described as an uneven and concentrated workload. The ministry has also made adjustments to internal processes and control methods to reduce the likelihood of errors and improved the capacity of information systems for the same purpose, he added.

Besides, an analysis is currently underway to increase the functionality and synergies of information systems related to the budget, Kirsipuu said. From next year, the ministry is also planning to simplify the nationwide budget process by drafting the state budget and the multi-annual fiscal strategy together in the autumn instead of preparing two documents and handling two decision-making processes at different times of the year. 

"All of these changes are also aimed at reducing the number of potential errors, but the process of preparing the state budget will always remain a complex process that takes place under great time pressure and involves a large number of parties and volumes of data," the deputy secretary general added. 

A report by the Estonian National Audit Office published on Tuesday shows that all consolidated amounts - revenue, expenditure, investments, financing transactions - in the state budget 2020 passed as law by the Riigikogu are incorrect because the Ministry of Finance, which prepared the draft legislation, has made accounting and calculation errors in hundreds of millions euros.

The audit report shows that the ministry presented the revenue of the budget higher and expenditures, investments, and financing transactions lower than it actually is. As a result, the difference between revenue and expenditure in the state budget has been presented as more favorable by €365 million.


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Editor: Helen Wright

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