State controller to adopt school borrowing limits

  • 2009-09-02
  • By Ella Karapetyan
TALLINN - Estonia's State controller has made an offer to the state government to adopt a credit limit for public universities, as well as for high schools taking large loans, or credits, which are now having a serious negative influence on the overall budget deficit.
"According to the State controller, in addition to their target institutions, it is also necessary to enter credit limits for public universities, which also took excess credits and which can have quite a dangerous influence on the state budget," explained the State Controller Mihkel Oviir in his letter directed to the state government. He says that till now, the state hadn't considered establishing these credit limits for the institutions.

"Taking into account demographic changes and the necessity to lower the number of high schools, it is probable that with the  growth of credit lending, not all high schools will manage to cope with  the credit service, and there remains a danger that they can still apply for additional grants from the state," added Oviir.

The chief controller at the state audit office for the State Controller, Tarmo Olgo, noted that,  according to the State Control, it would be reasonable to establish credit restrictions for public high schools, too.

Concerning demographic changes, which was mentioned in Oviir's letter, Olgo recognized that, according to the Ministry of Education and Science, in the 2006/07 academic year there were more than 36,000 students studying at the 10-12 levels, but by 2013 this number is expected to decrease by about 42 percent, which means that there would potentially be 21,000 students less studying at the universities and high schools.

"The decrease in the number of students will unavoidably lead to a shrinkage of high schools, which will affect the quality of education," said Olgo. The State Controller is connected to the government's plan for combining state target institutions,  having similar goals, and entering into credit restrictions for them.

However, the state controller has also made the offer to lower, for 2010, personnel expenses in the target institutions by at least 10 percent. "As financing of target institutions is decreasing, they will face difficult conditions concerning credit contracts, and the banks will have the right to require the pre-term cancellation of credit contracts," said Oviir.