Health care workers end 25-day strike

The health care workers’ unions have said they will end their strike on Friday, October 26, after signing a memorandum of understanding on the most important conditions of a new collective agreement with the Hospitals Association, reported ERR.

Beginning next year, resident physicians will get paid for the full 40 hours per week, rather than the current 32 hours. Doctors and nurses’ workloads will be reduced in outpatient care by 20 percent and inpatient care by 16 percent. In March 2013, minimum wages will rise by 23 percent for caregivers, 17.5 percent for nurses and 11 percent for doctors (to 2.6 euros, 4.5 euros, and 8 euros per hour, respectively).

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Tallinn among top 21 intelligent communities in the world

The international think tank Intelligent Community Forum (ICF) included Tallinn, the capital of Estonia, on its list of the 21 most intelligent communities in the world. Making it onto the Smart21 list is the first step in the competition of over 400 communities worldwide vying for the title of the most intelligent community of the year.

All the areas on the Smart21 list are good examples of economic development and the city government of Tallinn considers it an honour to even be included on the list.

Tallinn and the other competitors all focused on the same themes in their applications for this year – innovation and employment. Tallinn was then compared to other communities on the basis of these two areas. Tallinn’s application included descriptions of programmes and development plans that have created a foundation for innovation in the city of Tallinn, including the initiative to create an IT academy and the Estonian Information Society Strategy 2013+.

This is not the first time the city of Tallinn has been recognised by the ICF. From 2007-2010 Tallinn was ranked among the Seven Most Intelligent Communities.

The Intelligent Communities Forum is a non-profit organisation that brings together intelligent communities from all over the world. The organisation introduces its members’ accomplishments to the world, helps to develop valuable ties among the public and private sector leaders in its communities, helps with peaceful development in communities, and tries to ensure good opportunities for innovative and dynamic  information technology development.

Only communities that qualify for the Smart21, Intelligent Community of the Year, or Top Seven Intelligent Communities can be members of the ICF. Tallinn’s participation in the work of the ICF offers good opportunities to gain useful knowledge about IT and other high-technology solutions in the public sectors of other countries. Being part of the ICF also helps to introduce Tallinn as an innovative and developed community with modern solutions in the public sector outside of the European Union.

Source: Estonian Review

Citizens can track online taxes spent by local authorities

As a part of the pilot project of a cloud service, everyone can now take a look at the financial health and expenditure of Estonian local authorities online. The goal of the service is to bring the state closer to its citizens and to make local government transparent in the entire country. The state expects active citizens to attach their own convenience solutions to the created cloud applications and to take some of the development of public administration upon themselves by way of civil initiative.

 

The service at www.riigipilv.ee is unique in the world and was created at the initiative of the Ministry of Finance and the Ministry of Economic Affairs and Communications, and developed with the assistance of Estonian telecommunications company Elion. Counsellor of the Ministry of Economic Affairs and Communications Andrus Aaslaid said that cloud-based services are a massive step forward in the development of an IT state. “Although other countries have started to catch up with us in the development of e-state, cloud-based information applications are the solutions that currently allow us to create a completely new quality,” he noted. “As far as we know, no other state has yet managed to make the financial status and expenditure of all of its local authorities visible and ready for analysis to such an extent and on such a level. I would like to hope that this is a boost to the state’s e-services on a broader scale.”

 

Andrus Jõgi from the Local Governments Financial Management Department of the Ministry of Finance explained that various databases of the state have been accessible to the public on the basis of Estonian laws in the past, but using these databases was so complicated and time-consuming that the only people who did it were those who needed the specific data for their work. “We wanted to make the data easily accessible to all people, which is why we and Elion created this virtual server-based solution or transferred the financial data of local authorities into a cloud where everyone can view, download, compare and analyse it.”

 

Another important aspect that was considered during the development of the service is that it must be possible for third parties to add their applications, and the service must also meet future needs and, for example, make it possible to obtain data from several national databases at the same time.

 

The first solution of civil initiative already exists. Elion’s further development of the cloud application, called LEO (Läbipaistav Eesti Omavalitsus / Transparent Local Government in Estonia) is already accessible at www.juhtimisinfo.ee and was created by Estonian business consultation company Infovara. CEO of Infovara Maigi Peeduli says that the application is still a commercial solution, which will remain accessible to everyone free of charge at least until the end of 2012. “This is a convenience service, which is attached to Elion’s application and which is ever more user-friendly,” added Peeduli.

 

Source: Estonian Ministry of Finance

Central Government budget balance improved

According to revised data of Statistics Estonia, in 2011 the Estonian general government sector surplus was 1.1% and gross debt level was 6.1% of the Gross Domestic Product (GDP). The central government budget reached the surplus again after three successive years of deficit.

In 2011, the surplus of the general government, accounted as the Maastricht deficit criteria, was 182.4 million euros according to revised data. Compared to preliminary data published in March the revenues from the European Union Funds were specified the most, impacting positively on the relation of the central government’s as well as local governments’ revenues and expenditures. Due to the revised data, at the end of 2011, the central government revenues surmounted the expenditures by 14.8 million euros. The surplus of local governments’ sector was 20.5 million euros and the budget surplus of social security funds remained the same (147.1 million euros).

The general government consolidated debt (Maastricht debt) was 974.8 million euros, 55% of which were liabilities of local governments and 45% of central governments. The debt of social security funds was under 1% of the total debt.

Surplus/deficit of the general government by sub-sectors in Estonia, 2002–2011

In Estonia the General Government sector comprises three sub-sectors: 1) central government (state budget units and extra-budgetary funds, foundations, public-legal institutions); 2) local governments (city and commune administrations with their subsidiary units, foundations); 3) social security funds (Health Insurance Fund, Unemployment Insurance Fund).

Eurostat is going to publish the data on the revised debt and deficit levels of the Member States on 22 October.

Source: Statistics Estonia

Estonia’s H1 fiscal receipts at 50.2 pct of full-year target

Revenue inflow into the Estonian state budget during the first six months of this year totalled 3.12 billion euros, which equals 50.2% of the budgeted 12-month amount, it appears from a report on fiscal performance in the first half-year that the cabinet heard on Thursday. Compared with the first half of 2011, receipts have grown by nearly 60 million euros, spokespeople for the government said.

Tax revenues in the January-June period amounted to 2.25 billion euros, equalling 48.3% of the full-year target. Non-tax revenues, at 861.9 million euros, made up 55.6% of the sum total set out in the state budget.

Expenditures during the period totalled 3.03 billion euros, 44.8% of the budgeted outlays for the period. Compared with the first half of 2011, expenditures were bigger by 12 million euros.

The size of external support in the 2012 state budget is shown at one billion euros and during the first six months of the year 34.8% of it, or 349.2 million euros, was paid out. That is 47.4 million euros more than in the corresponding period a year ago.

In the words of the Finance Ministry, developments in the economy in the first two quarters of the year have surpassed expectations, yet a deceleration of economic growth is seen to continue in the coming quarters. Estonia posted annual economic growth of 3.6% in the first quarter of this year and 2% for the second quarter, according to tentative figures.

Source: Estonian Review

Moody’s affirms A1 rating for Estonia

Moody’s Investors Service affirmed Estonia’s A1 government bond rating and stable outlook on 25 July. Moody’s confirmed Estonia’s A1 rating and stable outlook. The rating agency based its decision on conservative budgetary policies, a strong balance sheet, low levels of indebtedness, and sizable fiscal reserves.

“Despite the intensification of the euro area crisis, which will result in a slowdown of growth, Estonia’s susceptibility to external shocks is considered to be low. This is supported by negligible macroeconomic imbalances and a relatively healthy banking system,” the report from Moody’s said.

Moody’s praised the government’s commitment to satisfying the Maastricht Treaty criteria after the 14.3 % economic contraction in 2009. It also pointed to a budget surplus in 2011 despite a predicted deficit, as well as economic growth of 7.6 % last year (the highest growth in the euro area).

Moody’s expects lower growth of 1.7 % in 2012, due to decreasing external demand, increased government expenditures on energy investments and resumed contribution to the second-pillar social security fund. “However, Moody’s believes that the government’s demonstrated policy responsiveness and its commitment to conservative fiscal policies will compel a reversal of the budget deficit and the resumption of fiscal reserve accumulation,” the report said.

The full Moody’s report can be read here.

Source: Estonian Review

Azerbaijan learns Estonian e-government

Azerbaijanhas taken the X-Road – usingEstonia’s experience in e-government, they are building an e-government of their own. Is there anything to learn from their experience? The following case study highlights their lessons. 

Estoniais known as the model country for e-solutions in both public and private sector. The country’s e-government systems have enabled moving many government functions into online environments, cutting down on bureaucracy and granting citizens access to e-services such as e-tax or i-voting.

With Estonia’s example in mind, Azerbaijanset to follow the lead and establish an e-government of their own, using the know-how from Estoniato launch statewide information systems. Below you will find a case study of the Azerbaijani e-government as described by Jana Krimpe, the president of B.EST Solutions – the company that was founded to execute the ambitious plans.

What were the preconditions for establishing an e-government in Azerbaijan?

The first and foremost requirement was to get clear priority for the project from the government, which also required all the parties involved to be on the same page on what needed to be done. Also crucial for the project was to get the right team with the right qualifications involved on the Azerbaijani side.

The backbone of the e-government infrastructure was X-Road – a secure data exchange layer connecting state information systems. In Estonia, this was implemented by the government with a decree that required all nationwide databases to be connected to the X-Road. It was clear thatAzerbaijan would have to use the same method to enforce new data exchange systems.

The second critical requirement was a competent local partner. This is essential for all new implementations – the partner needs to be technically capable and speak the local language as well as be politically acceptable and have good government ties. If a single partner doesn’t fulfill these requirements, multiple partners are also an option.

Preconditions for successful implementation of e-government:

•         Clear priorities set by decision makers
•         Competent and respected local partners
   

What were the main challenges?

There were a lot of different challenges in implementing the Azerbaijani e-government – exporting X-Road turned out to be much more complicated than anticipated. Being very proud of the existing system, the Estonian team was prepared to offer a secure and economical solution forAzerbaijan to manage their nationwide information systems. But no such system can be simply transferred from one setting to another.

The main challenges were not so much technical, although Azerbaijani legislation was also a lot stricter in their digital signatures, which demanded additional security measures. But the real issues lay in the institutions and politics – the project demanded a lot of inter-organizational cooperation and changing the business processes of government institutions. A lot of communication was required with institutions, top leaders, and IT departments.

The fact that X-Road was meant to be a decentralized system with it’s data remaining in individual databases and access controlled by current data “owners” was important in persuading the ministries. The solution itself was so surprisingly simple that  communicating it was a considerable effort. Once the idea was delivered, the rest was much easier.

Main challenges to consider:

•       No system can simply be transferred to a new context without changes
•       Local legislation must support quick adoption
•      Buy-in from local owners of the information systems is crucial
   

What’s ahead for the Azerbaijani e-state?

Currently the focus has been on creating the preconditions for an e-state – automated queries between state databases are the key. The services that can be built on this infrastructure once it exists are already part of the project’s second phase. So first, we need to test the infrastructure sufficiently to move on to next phases.

There are 60 e-services that are presently available inAzerbaijanand the total number planned for the next year is 300. 16 state institutions are already using the e-government portal and 12 of them are offering e-services. However, since many citizens don’t yet possess electronic ID-cards that would enable them to use the e-services and are still not aware of the benefits, this is an area that will need to be worked on in order to gain widespread public adoption.

Getting citizens to adopt rather expensive and not yet mandatory ID-cards is a major obstacle that will need to be addressed in order for the e-state to take off. However, the government as well as the President of Azerbaijan have clearly stated their intent to do everything in their power to support the fast development of e-government and its services.

Future challenges:

•       Testing and validating the infrastructure
•       Making electronic ID-cards available for citizens
•       Communicating the benefits of the e-services

 Source: Estonian ICT Export Cluster

Government approves State Budget Strategy 2013-2016

The State Budget Strategy 2013-2016, approved by the Government today, sets the objective for the next four years to support economic growth and raise competitiveness, to provide people with a greater sense of security and to promote prosperity. The plans for next year include restoring the general government structural budget surplus and gradually  increasing it to one per cent of GDP by the year 2016.

Under the 2013 – 2016 State Budget Strategy and the 2012 Stability Programme, the general government structural budget will run a surplus over the entire strategy period. A sustained budget surplus will support economic growth and allow fiscal reserves to be restored.

The general government will reach a nominal surplus in 2014 and it will increase to 0.9 per cent of GDP by 2016. One of the objectives in the State Budget Strategy is to increase the amount of  fiscal reserves, to ensure stability in the future. In the event of better than expected economic growth, the Government will direct any revenue windfalls into reserves in order to restore a necessary buffer for the future. The structural position of the budget is the nominal budget position of the government sector less any one-off and economic-cycle effects.

“Over the next few years as well, the state budget will be run at a surplus under normal circumstances, as agreed, and some curbing of forecasts due to deterioration in the external conditions cannot change that attitude. Estonia’s economy is about to achieve the level of growth that it is capable of, and a sustained balanced budget will provide its citizens and businesses with greater confidence and a greater sense of security,” Minister of Finance Jürgen Ligi said. 

The economic forecast foresees that the debt burden of the general government sector will grow to 11 per cent of GDP in 2013, primarily due to the effect of the European Financial Stability Facility. In the State Budget Strategy the contributions to the European Stability Mechanism and to Eesti Energia’s share capital are also taken into consideration. The debt burden will then begin to decline and reach 9.5 per cent of GDP by 2016. Under the plan, liquid financial assets will begin growing at the general government sector level from 2016.

The Government will continue structural reforms in order to set expenditures more efficient and in accordance with state opportunities. For example, network of general education schools will be rearranged to provide pupils higher quality education and range of options to choose. In the area of social security, there is a plan to restructure the insurance system against accidents at work and occupational diseases. 

For the purposes of the efficient functioning of government sector , there are also plans to continue with the centralised governance of centralising support services, joint procurement and real-estate management and with financial-accounting developments, all contributing to increased efficiency in the future.

When embarking on new activities, Ministries will have to review the funding to date and set priorities in that area. Under the strategy, by 2016 the level of budgetary cost, as a ratio of GDP, will decrease 5.5 percentage points, to 32.2 per cent of GDP, compared to 2011, and the government agencies operational costs, as a proportion of GDP, will decrease by 1.3 percentage points, to 4.3 per cent of GDP.

The broad lines of tax policy will remain the same, and the overall tax burden declining to 32.3 per cent of GDP by 2016, thanks to labour tax cuts. The Government plans to improve tax receipts by improving the collecting of taxes, above all by curbing the proportion of the black economy. In a tax change, the plans include an increase in the alcohol excise duty by 5 per cent per annum over the strategy period. Alcohol is taxed under the principle of raising its excise rate at least at the same rate as the overall increase in prices, so that the relative availability of alcohol does not grow.

The strategy, consolidating fiscal policy objectives for the next four years, together with the stability programme, to be submitted to the European Commission, are part of a new, stronger framework for European cooperation and consistent with the fiscal and economic policy of the euro zone.

The State Budget Strategy constitutes the basis for the 2013 budget. The goal is to ensure sustainable budget policy in an intermediate perspective and to make the government’s activity in the management of the state and the areas of activity more effective.

See  Estonian Stability Programme 2012 

Source: Estonian Ministry of Finance

Estonia needs better grip on budget spending at times of growth

In his speech before the Riigikogu on Tuesday, Eesti Pank Governor Andres Lipstok praised the fiscal policy pursued by the state so far, which has helped Estonia to successfully cope with the crisis. The Governor still suggested that the state get a better grip on budget spending at times of growth.

Presenting Eesti Pank’s Annual Report to the parliament, the governor of the central bank gave an overview of the contribution of Eesti Pank, as a part of the Eurosystem comprising the euro area central banks and the European Central Bank, to the alleviation of the impact of the crisis.

Euro area central banks took extraordinary measures to alleviate the significant deterioration of the crisis in the second half of 2011. Among other things, the Eurosystem gave commercial banks two sets of three-year loans in the total amount of nearly a trillion euros. “The liquidity injection prevented the spill-over of the crisis into real economy. This would have put corporate financing and job creation in jeopardy,” Lipstok said.

At the same time, the Governor of Eesti Pank reminded the parliament that extensive crisis management had also abruptly increased the risks inherent in the central bank’s balance sheets. “I am glad to see that the Executive Board and Supervisory Board agree on the long-term plan to raise the capital buffers three times to roughly 1.31 billion euros. This would bring us to the average level for euro area central banks,” Lipstok added.

The Governor of Eesti Pank pointed out that a successful exit from the euro area sovereign debt crisis would depend, above all, on the governments and parliaments. “This requires two things: implementation of structural reforms to create a solid basis for economic growth, and balancing of the budgets to restore confidence in public finance.”

Lipstok emphasised that a strong and sustainable fiscal policy would enhance the reliability of the state’s economic policy, lower interest rates, facilitate investments and smooth the progress of job creation. “A strong fiscal policy contributes to the general well-being in Estonia. The crisis taught us the importance of reserves, which ensure financing even at the most difficult of times.”

According to Lipstok, the Estonian public finance stands strong, compared to Europe. “At times of crisis, we demonstrated our ability to respond quickly. We now need to contemplate how to keep things in check at times of growth.”

Lipstok is worried about the coalition’s plan to postpone the achievement of a budget surplus beyond 2013 and deems it a sign of relaxation of the fiscal policy. “The current framework enables to change long-term goals too easily. The budget revenue forecast for 2013 has not deteriorated, compared to previous periods, and would allow to keep the promises made in 2011,” Lipstok said.

According to the State Budget Strategy approved by the government at the end of April, the government is expecting public revenues in the amount of 6.42 billion euros in 2013. Last year’s budget strategy estimated the revenue base for 2013 to amount to 6.32 billion euros.

Another fiscal policy problem pointed out by Lipstok is the lack of consensus on how to control public spending at times of growth. “We should thus consider the establishment of rules designed for restricting expenditure to reduce volatility and prevent unjustified expectations.”

The Governor of Eesti Pank added that, considering the ageing of the population and other factors contributing to the growth in public spending, Estonia must set its sights on ensuring a budget surplus over the cycle.

The Eesti Pank Governor’s speech is also available on the central bank’s website. The written text may differ from the actual speech.

Source: Bank of Estonia

Estonian general government surplus was 1 pct

According to preliminary data of Statistics Estonia, in 2011 the Estonian general government sector surplus was 1% and gross debt level was 6% of Gross Domestic Product (GDP).

At the end of 2011, the total revenues of the general government surmounted the expenditures, accounted as the Maastricht deficit criteria, by 163.9 million euros. The volume of the revenues as well as expenditures increased compared to 2010. The total revenues increased to 6.3 billion euros (7%) and the total expenditures to 6.1 billion euros (5%). Only the revenue from property income decreased mainly due to reducing of the dividends paid to the state.

In 2011 compared to the previous year, the total tax revenues received by general government increased by 345.1 million euros, bringing in 5.2 billion euros. Taxes on products and import taxes accounted for the biggest share of tax revenues (42%), totalling 2.2 billion euros or 11% more than a year earlier. The receipt from the taxes on properties and on income was one billion euros (8% more than a year ago), accounting for one fifth of the total revenues. The revenue from the social security contributions was 2 billion euros or 3% more than in the previous year.

The expenditures of central government exceeded the revenues again in 2011, although the deficit was only 0.7 million euros. Compared to the previous year, the volume of the central government loans increased by 5% while the volume of the securities other than shares decreased by 4%. Loans comprise the lion’s share of central government’s debt (83%). 55% of the central government’s loans were financed by the foreign capital.

In local governments’ sector the revenues amounted to 16.9 million euros more than expenditures made. The overall debt level of local governments remained on the same level as a year earlier, but the volume of the loans decreased by 4% and the volume of the securities other than shares, accounting for three quarters of the local governments’ debt portfolio, increased by 8%.

The most important role in achieving the surplus of general government consolidated budget was played by the social security funds, which in the previous year raised the surplus to 147.7 million euros (the growth 79%). The debt of the social security funds is continuously very small compared to other sectors and it even decreased compared to a year earlier. The general government consolidated debt (Maastricht debt) was 965 million euros at the end of 2011, increasing 1% compared to the previous year.

Surplus/deficit and debt level of the general government in Estonia, 1995–2011

In Estonia the General Government sector comprises three sub-sectors: 1) central government (state budget units and extra-budgetary funds, foundations, public-legal institutions); 2) local governments (city and commune administrations with their subsidiary units, foundations); 3) social security funds (Health Insurance Fund, Unemployment Insurance Fund).

Eurostat is going to publish the data on the preliminary debt and deficit levels of the Member States on 23 April.

Source: Statistics Estonia