Auditor general: State budget is complicated, incomprehensible and useless

Janar Holm.
Janar Holm. Source: ERR

State auditor general Janar Holm said the Ministry of Finance's mistakes and substandard work on drawing up the state budget is related to implementing activity-based budgeting. As a result, he said, Estonia has a state budget, which is complicated, incomprehensible and, at times, useless.

A National Audit Office report published on Tuesday shows that revenue, expenditure, investments, financing transactions in the State Budget 2020 are incorrect because the finance ministry made accounting and calculation errors totaling hundreds of millions euros. The difference between expenditure and revenue is approximately €365 million.

Amounts that should not be counted as revenue have also been registered as revenue, and some amounts have been left out when calculating the amounts of expenditure, investments, and financing transactions.

"The money is caught between different subtraction and addition operations. It is not a case of someone taking money away, the wrong rows have been added up and that is how it is," Holm told ETV's political interview show "Esimene stuudio" on Thursday.

Holm said it speaks of the quality of the work it took to draw up the state budget. "The issue is that we have built a budget system, where it is very tough to point to a specific point. The budget is complicated, drawing up the budget is complicated to the ministries, there are a bunch of tables that need to be put together and these mistakes happen. Should they for a document of such importance? I think it should not happen in any case," the state auditor said.

Holm noted that the faults likely have no connection to someone manipulating data to portray the economy as better than it actually is. "We assess that this was a mistake, simple and plain. We have no information on this being done blatantly."

"What has happened will certainly not honor Estonia. Correct state finances do not only mean we spend less than we earn, but also that we actually complete a state budget and know where the money goes and what it is used for," the state auditor said.

Responding to a question from show host Mirko Ojakivi about responsibility, Holm said there is no sense to look for one person. "The reason is that we have built up a budget, which is complicated, incomprehensible and I dare say - useless in some cases," Holm said. "Many issues stemmed from going to an activity-based system too eagerly."

The state auditor explained that an activity-based system should develop a budget, which makes sense of how much services such as border guards or different medical services cost. "Money is not allocated to institutions, but for services. This was done in the hopes of knowing the use of each Euro. In actuality, the opposite happened. The promised knowledge of knowing where funds go is not there," Holm noted.

Speaking on the Health Board's cold storage scandal, Holm said there is no doubt the board itself is responsible. "The Health Board is who is responsible that these medicines are maintained and kept. This comes from legislation," Holm said.

"If we say we do not know who is responsible, I would be extremely worried. Do we know who to ask now where these medicines are and what is done with them. I do not think there is any question here," the auditor noted, adding that the next question is about who will take over the responsibility. "Will it be the state? Or should the service be bought in from the private sector?"

Speaking of damages, Holm said that in addition to the value of the medicines, the recovery value and costs of storage in the meantime must also be taken into account.


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Editor: Kristjan Kallaste

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