"The National Audit Office finds that the changes proposed in the bill are completely useless – if the goal is to achieve greater transparency and clarity – and essentially change nothing compared to the current situation," Holm stated in a letter sent to Annely Akkermann, chair of the Riigikogu Finance Committee.

The auditor general essentially reiterated, more briefly and forcefully, the points he had made on September 20 in a letter to the Ministry of Finance regarding the draft amendment to the State Budget Act, which serves as a basis for annual budget acts.

According to Holm, the drafters of the bill themselves have not hidden the fact that the proposed amendment is pointless, as the explanatory memorandum on the effects of the law states: "The impact is minimal because the relevant data has always been presented in the state budget and financial plan process. Until now, the data was reflected in the explanatory memorandum; now it will be included in the law."

The auditor general also disputed the claim made in the first sentence of the explanatory memorandum, which states that "the bill will improve the transparency of the state budget in accordance with the coalition agreement starting in 2025."

"As a result of the amendment, no new information will be added to the budget documentation; the information will simply change locations – it will be moved from one place to another. Information currently contained in appendices 12 and 14 of the explanatory memorandum to the State Budget Act (as seen in the 2024 state budget explanatory memorandum) will be brought into the legislative text. Two views that were previously presented as annexes to the explanatory memorandum will be combined into one and made part of the law," the auditor general noted.

Greater Riigikogu influence only seeming

As a second major issue, Holm points out that the bill merely creates an illusion of greater opportunities for the Riigikogu to make more precise amendments to the state budget, but this is rendered meaningless by the [finance] minister's right to disregard decisions made by the Riigikogu.

"According to the bill, the minister has the right to alter the allocation of funds set by the state budget's spending limit, provided that the overall scope of the program's activities does not change. This means that the minister can make unlimited changes to the distribution of expenses within the program's limits, as decided by the Riigikogu. I emphasize that even if a member of the Riigikogu has made a specific amendment to the state budget and the Riigikogu has approved it, the minister can still ignore the Riigikogu's clear decision. This cannot be considered acceptable," the auditor general concluded.

Transparency will not improve

Thirdly, the auditor general highlights that transparency in the state budget will not improve by lengthening the explanatory memorandum or moving tables around if the memorandum continues to fail to clearly explain its content.

According to Holm, budget transparency will start to improve when each budget line item in the law is matched with a specific section in the explanatory memorandum, where one can comprehensively and in one place see what the budget line consists of, what the parts of that line represent, the justification for the funding and how the funding has changed compared to the previous period.

"Regardless of whether the state budget is called activity-based or based on some other principle, the basic requirement for any approach is that the explanatory memorandum should clearly explain each budget line in the law. Currently, it is impossible to obtain satisfactory information about the budget lines in the memorandum: the sections are inconsistently structured, the information related to a budget line is scattered across different sections of the memorandum, these sections are unconnected, explanations are often verbose and vague and the amounts related to the same funding object often differ between sections of the memorandum."

The auditor general emphasizes that transparency starts with clear explanations in the memorandum.

"Even with the addition of the extra table proposed in the bill at hand, clarity will not improve, because the explanatory memorandum for the 2025 state budget does not support making sense of the new rows. Transparency cannot increase because – as the drafters themselves have noted in the explanatory memorandum – no additional information is being added. The data currently presented in the memorandum will simply be reflected in the law, meaning it will just change location."

Legislative drafting that wastes everyone's time

In summary, the auditor general concludes that although the coalition government has set a goal of making the state more efficient and reducing bureaucracy, "a legislative amendment that changes nothing and is deemed ineffective even by its drafters is unnecessary and constitutes a waste of resources, which should be avoided at all costs."

The National Audit Office believes that the structure and content of the annual state budget (including the explanatory memorandum) require more fundamental changes to allow both the Riigikogu and the government to meaningfully plan and later oversee the use of state funds. Therefore, instead of focusing on this bill, it would be more appropriate to concentrate on making the 2026 state budget more transparent and implementing more fundamental changes to the budget process that would genuinely increase transparency.

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