Holm made his remarks at a time when on the one hand calls are being made for wide-ranging public sector cuts and tax hikes, but on the other, unused state budget funds may exceed €2 million both for 2023 and 2024.

Holm told ERR that when discussing budget surpluses, it is key to differentiate funds that are already committed yet where expenses have not yet been incurred, from those that have.

He said: "There are for instance European funds which carry over if unused. But really there is also a significant sum of money that has no obligations attached and we can certainly discuss whether we reduce that, or not."

The auditor general pointed out that in its audit of this year's financial statements, the National Audit Office identified as a problem whereby €1.6 billion of unused funds from the previous year was carried over into this year.

As a result, the state can't get a clear overview of how much money government agencies in actuality have at their disposal.

"If you take a look at the state budget, it shows €18.5 billion, or slightly less after the supplementary budget [issued in April], but in reality, the state has €19.6 billion to hand, which means the amount being used is about 8.5 percent larger than what was agreed in the budget."

"A good overview of where this money is being used is not present," Holm added.

The Ministry of Education and Research had the largest carryover into this year's budget from 2023.

According to Education Minister Kristina Kallas (Eesti 200), the main component of this was additional costs planned for accommodating the children of Ukrainian refugees in schools, which had not been utilized to the extent expected.

Research funds are also a significant part of the carryover, as many projects span multiple years.

If a project's start is delayed from one planned year to the next, the allocated money remains unused in the original budget year.

Kallas noted: "You can't say that carryover funds represent some kind of surplus. These are a normal part of budgetary planning."

Isamaa leader and chair of the Riigikogu's State Budget Control Committee Urmas Reinsalu said the quantity of unused funds has grown significantly in recent years, which implies a planning error and also demonstrates that resources exist that could be saved during tough economic times.

Reinsalu also criticized the Ministry of Finance for not until June this year providing an overview of last year's actual expenditures and surpluses - six months after the budget year ended.

He said: "This fact shows that we have so much money being carried over year after year, so when we talk about million-euro cuts, we are really talking about billions in unused funds within the current budget year."

"A separate problem is the underutilization of foreign funds, as these would bring in tax revenues too," Reinsalu continued.

Kristin Kallas conceded that the budgeting process could be more precise, reducing the need for such large reserves in the case of her ministry.

It had previously been the case that leftover funds had to be used by year-end.

This, however, had its drawbacks too, Kallas noted – for instance the excess public funds being splashed on end-of-year parties or excessive bonuses for a close circle of people.

"We definitely need to improve discipline in more accurately planning our budgets," the education minister added.

Janar Holm also cautioned about the year end spending spree which removing the carryover requirement could lead to. The question is the reasonable scale of carryover and how justified it is, he added.

On the other hand, state funds in one year may be used for the same purposes that the Riigikogu allocated them for in the preceding year, Holm noted, but when that money ends up in a large pool it becomes very difficult to track, including whether it is being used for its intended purpose.

The Ministry of Finance has also forecast LINK that the unused amount from the 2024 state budget will match that from last year's, as reported in the summer – ie. about €2 billion for each year.

According to Finance Minister Jürgen Ligi (Reform), some shifting of expenditures is not necessarily a bad thing, and a surplus doesn't spell "too much" money.

The matter is a "technical issue," he said, for instance in relation to too optimistic planning when it comes to projects using European support and which get delayed.

The carryover also includes funds allocated through previous supplementary budgets that were left unused, he added, and not just the main annual state budget.

Supplementary budgets were used during the Covid pandemic, and have been since the peak of that too, including this year.

A certain level of liquidity and shifting of expenditures is not inherently problematic but has developed over time as standard practice, the finance minister noted, while the task of ensuring reserves don't get too large is also to be stuck to.

--

Follow ERR News on Facebook and Twitter and never miss an update!