National Audit Office: State has supported 36,000 companies in ten years

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Tallinn Airport is the largest recipient of state subsidies. In ten years, the company has received €118,088,033 from the Estonian state.
Tallinn Airport is the largest recipient of state subsidies. In ten years, the company has received €118,088,033 from the Estonian state. Source: Siim Lõvi /ERR

According to a recent analysis by the Estonian National Audit Office (NAO), the completeness and usability of data available on state financial support provided to Estonian companies leaves much to be desired. According to the NAO, the Estonian state has given more than €4 billion to over 36,000 Estonian companies in the past ten years, via different organizations.

On Wednesday, Märt Loite, auditor general of the National Audit Office's Analysis Department, sent a note to Minister of Finance Mart Võrklaev (Reform) regarding issues with the integrity and usability of data on state financial support provided to companies.

In the letter, Loite asked the minister to pay particular attention to practical bottlenecks, which may be preventing those who design and provide business support funds from knowing which companies have already been granted funds, as well as from where and to what value.

The current situation impeded the provision of well thought-out and transparent support for businesses.

"The NAO finds that the state has granted more than €4 billion to over 36,000 Estonian companies via dozens of different agencies over the past ten years. However, it has failed to use the full potential of this economic policy lever due to a lack of data and little cooperation between grant providers," the letter says.

According to the NAO, if it wished, the state could give a much more targeted boost to Estonian businesses by encouraging sectors in different ways, supporting revenue-generating activities and helping to produce desired results, if policy makers had more comprehensive and reliable information on state aid provided so far and its impact.

In the fall of 2022, the NAO began preparing a broader analysis to assess the impact of state support on the development of enterprises in different sectors of the economy.

In other words, what has been the impact on society and the economy of the support provided to businesses using taxpayers' money.

In order to carry out this analysis, it was first necessary to find out how much the state has provided in financial support to Estonian enterprises, and for what purposes, over the last ten years.

Unfortunately, the NAO said, that it was not currently possible to conduct the planned analysis or prepare the related audit report in reasonable time. The reason being, that it could not compline a comprehensive and accurate data set on who has received aid, from which sources and how much was granted, due to shortcomings in the data.

The NAO hopes to return to the issue as soon as the quality of the data it has access to is sufficient to allow it to do so.

"Using the Public Procurement Register as a central information system for subsidies, the National Audit Office identified nearly 50 state institutions, foundations, agencies, state-owned companies, local government bodies and other public sector entities that have distributed money to support businesses, but whose data on the subsidies they have given is incomplete and unreliable, because the donors use different principles to account for the distribution of money," the letter said.

According to the NAO, some grant providers only report the amounts of grants awarded to companies in the Public Procurement Register, while others also report the actual payments. In addition, the data is often not corrected ex-post, in the case of recovery claims and payments for instance.

According to the NAO, there are likely to be more organizations providing financial aid to companies, however but the number of which is unknown as not all of them submit the relevant data to the Public Procurement Register.

For example, the information in the register, which states that only a small proportion of local authorities have provided financial support to companies over the last 10 years, may be incorrect.

The NAO also found, that the Public Procurement Register is not always being filled in. One of the reasons for this, is a lack of awareness, with some grant providers unaware that information on grants has to be submitted.

Some also admitted that they did not know how regularly and on what basis they ought to submit data to the Public Procurement Register.

The analysis shows that the companies, which have received the highest amounts of Estonian state aid over the past ten years are Tallinn Airport, Eesti Raudtee, Utilitas Tallinna Elektrijaam OÜ, Elektrilevi, Gren Eesti AS.

Finance minister: Definitely some kinks in system that need to be worked out

Estonian Minister of Finance Mart Võrklaev (Reform) told ERR, that the ministry will study the National Audit Office's recommendations and then consider what steps to take next.

"We thank the National Audit Office for their observations. This is an important issue and the distribution of subsidies must be clear and justified. There are certainly some kinks in the system that need to be worked out. We will examine the letter from the National Audit Office in more detail, and then we can consider ways to develop the data set," said Võrklaev.


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Editor: Michael Cole

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