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"I am glad that the general assessment of the International Monetary Fund mission regarding the management of public sector investments in Estonia is positive and Estonia is positioned within the league of the most successful countries in the world," Minister of Finance Martin Helme said in a press release. At the same time, the minister noted that it is nevertheless possible to improve the framework of the government's work in this matter.

"If we want to make good decisions, then we have to think much further ahead than the current four-year investment planning cycle. Investments into infrastructure and buildings have an impact on our living environment and space, and these aspects need to be taken more into account when evaluating investments. We need to start thinking more about investments' future life expectancy expenses and their savings, not as much about the cheap investment amount," Helme said.

According to the minister, it is also important to deal with public-private partnership (PPP) opportunities in the future as well. "The topic of investment is very important for the current government. Estonia has made few investments in cooperation with the private sector, we are planning to analyze these possibilities more thoroughly," he said.

In its report, the IMF proposed that some practices that are already effectively implemented should be formalized in the institutional design.  For example, there is a welcome drive to first fund ongoing projects before making budget allocations to new projects, and to provide comprehensively for maintenance expenditure. These preferences should also be stated explicitly in regulations, it appears from the report.

In addition, public investment projects should be managed in an integrated portfolio at all stages of the investment cycle. At the planning stage, all large investment projects should be systematically identified, regardless of funding source and implementing modalities, and a 10-year investment plan could be introduced for information purposes.  And all major projects should undergo a standard project appraisal and be selected from an integrated project pipeline by applying standard criteria, the IMF said. 

The IMF also suggested strengthening the management of fiscal risks and added that central oversight of the whole project portfolio should be instituted and encompass monitoring of project progress and potential risks.

In the government's work plan, the Ministry of Finance has the task of analyzing and making proposals on how to improve the organization of public investment in Estonia by September next year. This is part of the general review of the state budget framework. The plan is for the analysis and proposals to be largely guided by the conclusions of the IMF.

The IMF technical aid mission was in Estonia at the invitation of the Ministry of Finance at the end of last year. As part of the assessment, the entire life cycle of investments was explored -- what the fiscal and legal rules of Estonia are as well as how investment planning, project evaluation and selection, and implementation and monitoring work.