National Audit Office: last year’s funding for larger-scale crisis measures mostly reached the companies in the areas of activity that were hit the hardest by the corona crisis

5/19/2021 | 11:00 AM

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TALLINN, May 19, 2021 - The review of the National Audit Office shows that the funds of last year's main and large-scale crisis measures, in total 745 million euros, mostly reached the companies in the areas of activity that were more affected by the crisis caused by the coronavirus. With an exception of the aid measures of the Rural Development Foundation, which often reached companies that had not suffered more due to the loss of income than other companies that did not receive or did not ask for help.

“In its review, the National Audit Office has not assessed the justification of individual decisions or the procedural process of loans or support funds. In general, however, it can be said that companies that were really in trouble asked for and benefited from these measures,” said Audit Manager Meelis Peerna.

The review shows that last year, the turnover of the companies that received wage compensation from the Estonian Unemployment Insurance Fund had decreased twice as much as the turnover of the companies that did not receive any compensation. The sales turnover of those who received loans or surety from KredEx for crisis assistance had decreased by almost three times more than that of the companies that did not receive crisis loans or compensations. In 2020, the sales turnover of companies that received aid from the Enterprise Estonia (EAS) decreased on average by over three times more than that of companies that did not receive any aid from the measure.

The average sales turnover of companies that received wage compensation from the Unemployment Insurance Fund fell by 19.4% in 2020 compared to the previous year, while the turnover of those companies that did not receive compensation decreased by 8.6%. The average sales turnover of companies that received aid from Enterprise Estonia's aid measures decreased by one third in 2020: 33.2%. While the companies that did not benefit from the measures, saw a decrease of 8.6%. At the same time, the average sales turnover of the companies that received a loan and/or surety from the Rural Development Foundation decreased less (-7.2%) than that of the companies that did not receive any aid from the measures (-8.6%).

In the review, the NAO also looked at the areas of activity of the companies that received the most of the support. Among the fields of activity, the share of companies that received wage compensation from the Unemployment Insurance Fund, aid from the crisis measures of Enterprise Estonia and extraordinary loans and sureties from KredEx were mostly active in accommodation and food service business. "In general, the picture of the implementation of aid measures is rather logical, because Statistics Estonia's data indicate that in 2020, the sales turnover decreased the most in accommodation and food service activities, arts, entertainment and leisure activities as compared to 2019," commented Audit Manager Meelis Peerna. Of the activities with a larger share in the economy, the sales turnover also decreased significantly in transport and warehousing.

However, the Rural Development Foundation (MES) granted more loans or loan sureties to companies in the agriculture, forestry and fishing sectors, which were less affected by the coronavirus crisis. Also, the average turnover of the companies operating in this field and benefiting from the MES measures decreased by 1.4% in 2020, and the sales turnover of the companies that did not receive any assistance decreased by 4% on average. "When looking at the measures for rural development, it can be concluded that the aid measures did not reach the companies with the largest decrease in turnover," said Audit Manager Mr. Peerna.

Nearly three quarters of the companies receiving crisis aid and covered by the review received aid from one measure (73.9%), almost a quarter (24.7%) received aid from two crisis measures. There were 12 companies, or 0.05% of the beneficiary companies, that received assistance from the implementers of all four measures covered by the review.

Background information:

At the beginning of the COVID-19 crisis, the Government adopted several measures to support the economy. The focus of the NAO's review and analysis was on the wage compensation by the Estonian Unemployment Insurance Fund, aid for rent payments to trade and service companies by the Enterprise Estonia, aid for the tourism sector and aid for small businesses. In addition, the NAO reviewed extraordinary loans and loan sureties issued to companies by KredEx and the Rural Development Foundation.

330 million euros were spent on KredEx loans and sureties, 256 million euros on wage compensation of the Unemployment Fund, 125 million euros on loans and sureties by the Rural Development Foundation and 34 million euros on grants from the Enterprise Estonia Foundation.

The Government decided to launch the measures as soon as possible, and so there was little time to assess the business situation to precisely target the measures and develop legislation. The agencies that implemented the aid measures had little time to develop the processes needed to implement the measures. The National Audit Office saw a risk in this that regulations made on the basis of insufficient preliminary work and hastily created work processes do not ensure that aid measures reach the enterprises in the areas of activities where the impact of the crisis is most serious.

During the preparation of the review, the NAO examined whether the national aid measures reached the areas where the impact of the COVID crisis was more serious, and whether the support reached companies that were hit the hardest based on the economic indicators (sales, labour tax, number of employees).

The NAO has published the results of wage compensation and other crisis measures on the NAO's website as interactive figures, where everyone can view the results of their interest.[1] It is not possible to view individual companies, but the results can be viewed by periods and areas of activity. Wage compensation data can also be viewed by company size and county. From the interactive figures, it is possible to see in more detail the number of companies and average indicators by economic activities and other subdivisions.

 

Contact:
Toomas Mattson
Advisor to the National Audit Office
+372 513 4900
toomas.mattson@riigikontroll.ee
or
press@riigikontroll.ee

  • Posted: 5/19/2021 11:00 AM
  • Last Update: 5/19/2021 10:33 AM
  • Last Review: 5/19/2021 10:33 AM

The focus of the National Audit Office was on the amounts transferred through the Unemployment Insurance Fund, the Enterprise Estonia, KredEx and the Rural Development Foundation.

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