Earlier this month German media reported the new European Commission plans to extensively reform the entire European Union budgeting process. It could become activity-based or expenditure-based, similar to Estonia's.

This means that each member state will only receive funds if the country agrees with the Commission on certain reforms that it must be achieved with this money. If the target is not achieved, the member state may have to give it back.

But Pentus-Rosimannus said there are several problems with the Commission's plan.

"The main problem is that the goals set on paper are often not well designed or clearly defined, so in the end, It is uncertain whether the funds will actually be used effectively to achieve positive outcomes," she said.

One example is the coronavirus recovery fund, the former finance minister said.

"One of the objectives of the recovery fund established to mitigate the COVID-19 crisis was to support the digitalization of the education system. This is very necessary, as digital readiness varies greatly across Europe. However, in several member states, the results were the opposite of what was intended. For instance, schools were provided with laptops, but it later turned out that these laptops were not compatible with the existing educational systems because they had restrictions that prevented the necessary software from being installed. As a result, a significant number of these relatively expensive laptops were left unused in school storage rooms.

"This is just one example, but it illustrates how something that appears convincing on paper may not work in real life," Pentus-Rosimannus explained.

The German outlet  Frankfurter Allgemeine Zeitung said the reform aims to make the process less bureaucratic.

Pentus-Rosimannus said the commission's goal is worthwhile, but may not work in practice.

"The goal is to achieve concrete, real-world results with taxpayer money, not just to spend it for the sake of spending. On paper, everything looks very promising. Unfortunately, in real life, the experience with the recovery fund has shown that the outcome can sometimes be a rather opaque structure. For instance, under the current funding system, there is not a clear overview of which areas are covered by multiple programs essentially funding the same thing. I think we no longer have a solid understanding of this, which partly explains the need for a thorough budget reset or review. Such a reassessment is certainly valuable work. However, it is essential that, in the process, we do not lose either transparency or the focus on achieving tangible results," she said.

The Ministry of Finance did not want to comment on the discussions because the plan is still at an early stage.

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