At Wednesday's meeting of the Riigikogu State Budget Control Select Committee, discussions focused on last year's budget execution and governance costs for 2025.

Auditor General Janar Holm stated that when comparing the annex of this year's State Budget Act — detailing labor costs, operating expenses and other subsidies that were targeted for cuts — with the baseline for reductions, the supposedly reduced budget was actually €155 million larger than the previous budget in these areas.

Holm pointed out that international membership fees, which were not subject to cuts, must also be taken into account and that reductions were implemented before additional funding was allocated.

"After the cuts, additional funding decisions were made across all government areas, seemingly as a result of the coalition agreement," Holm said. "But if we look at the numbers alone, one could conclude that the reduced budget is actually €155 million larger."

According to Holm, the specifics of what was cut, where and by how much will likely become clear in February or March of next year, as ministries have already begun reallocating funds, with some making significant adjustments.

"If we genuinely wanted to cut specific budget lines, we would have to adjust those exact expenditure items," Holm added. "But right now, ministries have considerable freedom to shift and reallocate these funds as they see fit."

Committee chair Urmas Reinsalu asked whether the assumption was correct that the amount earmarked in the state budget strategy for 2025-2027 had not decreased by €132 million, as initially planned before the budget was approved, but had instead nominally increased by €155 million.

Regina Vällik, head of the financial department at the Ministry of Finance, acknowledged that this could be true but emphasized that the cuts were made before the 2025 budget process — meaning they were applied to the initial budget volume.

The auditor general noted that the coalition agreement explicitly states that labor costs, operating expenses and other subsidies are to be cut by a certain percentage. However, in practice, these reductions served only as a basis for the budgeting process and cuts could have been made elsewhere instead.

"The general perception of budget cuts is that the amount being cut decreases. But in this case, when put into context, what was actually cut was an increase," Holm explained. "One could say that without these so-called cuts, expenditures would have been €255 million higher. But the reality is that if cuts are made initially and then money is later added back, it's unclear whether the cuts truly happened or not. That is the issue."

Next year, once the state budget has been executed, it will be possible to assess what actually transpired, as additional carry-over funds will also become evident over time.

"In my view, actual budget execution is beyond the Ministry of Finance's control from the moment ministries receive their allocated funds, as there is extreme flexibility," Holm remarked. "If you're looking for information on where exactly cuts were made, that would be nearly impossible to determine."

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