Government support to business is not systemised

8/28/2003 | 12:00 AM

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TALLINN, 28 August 2003 - The SAO examined the principles the government applies for the purpose of supporting business and found these principles are unclear. This could prejudice free competition and it complicates the monitoring of the expediency and efficiency of using the support.

The reasons for the lack of clarity include the overlapping of the government areas of the Ministry Economic Affairs and Communications, the Ministry of Social Affairs and the Ministry of Internal Affairs, the inadequate mutual co-ordination, the agency-based financing practice applicable in the public sector and the weak intermediary role of the Ministry of Finance.

As a consequence of insufficient co-operation between the Ministries dealing with the field of enterprise, several development programs concerning business support have been drawn up. The government grants funds to operators in the framework of different policies for enterprise and employment and also in accordance with rural development and regional policies. These policies, however, are not logically interrelated and do not refer to the obvious framework document, i.e. the national budget strategy, which should be a guideline for all the other strategies and secondary action plans.

The agency-based approach, where each Minister has developed only the domain within his or her own government area without seeing the government actions as a whole, has, among other things, affected the establishment of implementing units acting as paying agents. Business support is granted by the Enterprise Estonia Foundation, the Agricultural Registers and Information Board, the Labour Market Board and the Estonian Chamber of Agriculture and Commerce. KredEx and the Rural Development Foundation provide credit and export guarantees. These entities represent many different legal forms and they are managed in different ways, but they all must preserve and develop know-how for like activities.

In addition, the lack of clarity is supported by the fact that currently no assessment of the impact of government intervention on enterprise has been made.

In the interests of using the funds for business support more efficiently, the SAO suggested that the Ministries dealing with business support should come to an agreement on common objectives of providing support and a common budget. Also, the duplication of efforts should be avoided by way of specifying the functions of different Ministries and analysing the purposefulness of the existence and activities of the current implementing units.

On the basis of the decision of Government Ministers, who discussed the audit results, the relevant Ministers must, by October 1, submit proposals for improving the situation in the field. The Government Ministers are planning to discuss the results of implementing the current policies after the Ministries have delivered their reports in October and December this year.


Sven Soiver
Press Representative of State Audit Office
Telephone: (372) 640 0787
GSM: (372) 53 414464
E-mail: Sven.Soiver@riigikontroll.ee

  • Posted: 8/28/2003 12:00 AM
  • Last Update: 10/2/2015 4:46 PM
  • Last Review: 10/2/2015 4:46 PM

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