Jürgen Ligi cranks up cost cutting machine

Photo: Peeter Langovits / Postimees

While we got accustomed to hear about Estonia’s financial affairs being in order, Minister of Finance Jürgen Ligi was forced to crank up the cutting machine again, making ministries chop off chunks of costs in coming years.

With Riigikogu race soon looming, state agencies, ministers and chancellors have received a memo by Minister of Finance focusing on cuts needed in 2015 – the election year – and 2016.

«No denying: a paper of this sort has indeed been circulated, coming as total surprise. So this is the financial affairs in order,» a cabinet minister muttered, ironically. Pursuant to plans, as they stand, the axe hits heaviest at education, internal security, and social and cultural affairs.

Cutting tasks distributed

For financial ministry, the picture is quite clear: the excellent budget for next year lacks €55.8, the 2016 hole being €59.7m. Cutting jobs have been distributed, by the finance ministry.

Some striking examples: education ministry needs to cut €14m, interior ministry close to tem million, social ministry six million, and economy ministry five million euros worth of costs.

To the same tune, or even more painfully, the tasks fall for all regarding 2016, exceptions being Riigikogu and economy ministry who need to cut a little bit less.

Several cabinet ministers, asked by Postimees to assess the finance ministry paper, declined to talk at all. Education minister Jaak Aaviksoo, his field getting the biggest blow, chose not to comment.

«Yes, I have seen the paper, and before to think further, to say nothing about acting, this needs to be discussed in the government. This I have also proposed and I hope the cabinet will find time for that,» said Mr Aaviksoo.

According to Jürgen Ligi, the new cost ceilings do not at all mean financial plans for the ministries; rather, these are starting positions – very technical by nature – based on which the budget strategy talks will begin. All ministries are to present their financial plans by March 1^st. «April’s economic forecast may, in turn, bring changes; basically, however, the rule is that the picture that emerges at this time of the year is never liked by no one,» said Mr Ligi.

Mr Ligi underlined that that, all in all, the areas of government may spend 4.2 per cent more in 2015, as compared to 2014. «The starting position of the negotiations does not contain any new decision nor priority – which, however, will definitely come,» admitted Mr Ligi. «At the same time, as revealed by costs analysis, areas governed by the ministries do have room for cuts.»

Talks to follow

Social minister Taavi Rõivas advised not to become overly ecstatic over the memo and the dry cutting figures. «We do know, don’t we, that the real budget volume increases; we know that this is the budget process: first, the base is settled, then requests for more are presented, and it would be erroneous to take the current in-between stage as final,» said Mr Rõivas.

«It is another matter altogether with all the costs that grow automatically i.e. calculated costs in social ministry’s domain where, in the next year, pensions are forecast to grow fast; according to forecasts, pensions growth is over six percent; but this particular issue is not about that, as that comes by law and is automatic.»

He expressed hopes that, as every year, the budget talks will be thorough, with ministries applying for extras, first discussing the sums with finance ministry and then with the entire government; to see what can be carried out and to which degree. «This is a totally normal budget process,» said Mr Rõivas.

Even so, as prior experience has shown, no one wants to cut his domain’s costs in election year; thus, cuts and preparation of budget may prove exceedingly complicated.

Tighten the belts

Finance ministry hands out cutting jobs for 2015:*

Institutions

•    Riigikogu – €489,476

•    Office of the President – €143,130

•    National Audit Office – €154,184

•    Office of the Chancellor of Justice – €72,927

•    Supreme Court – €121,891

•    Government Office – €194,263

Ministries

•    Ministry of Education and Research – €14.3m

•    Ministry of Justice – €3.6m

•    Ministry of the Environment – €1.8m

•    Ministry of Culture – €5m

•    Ministry of Economic Affairs and Communication – €5m

•    Ministry of Agriculture – €1.6m

•    Ministry of Finance – €2.6m

•    Ministry of the Interior – €9.6m

•    Regional minister’s domain – €882,396

•    Ministry of Defence – €0

•    Ministry of Social Affairs – €6m

•    Ministry of Foreign Affairs – €2.4m

Totalling about €54m

*According to forecasts, €59.7m more is to be cut, in 2016.