Eesti Pank's budget for 2014 will be 19.4 million euros, which is 4.1% less than the budget for last year.

The budget of the central bank is 2.5% smaller than in 2013 without the costs of cash handling, which can vary greatly from year to year.

“The budget of the central bank reflects the management's vision of an efficient organisation. We have reduced staff numbers in support services and found ways to make savings from infrastructure and other service costs. The sale of our property in Kuressaare also helped limit our expenses. The main growth in our expenses has come from personnel costs as we have to remain competitive in the labour market”, said the Governor of Eesti Pank, Ardo Hansson.

Hansson explained that the strategic vision of the management is very clear if costs are compared over a long period. “The Eesti Pank budget has increased by slightly less than one percent over the last two years, at a time when Estonia's nominal economic growth is forecast to have been over 12 percent. We have put particular limits on our spending on support services. We are also continually assessing our staffing requirements as wage costs and IT costs will continue to rise in the longer term”.

Eesti Pank aims to provide Estonian society with the highest possible quality of central banking services as efficiently as possible. Among other measures, the bank considers it a priority that its costs should remain at the same level relative to gross domestic product (GDP) that they have been in earlier years. This means that the relative costs of central banking services should not rise for Estonian society. As cash handling costs can vary widely from year to year, they are not included in comparisons. The central bank's budget for 2013 was 0.095% of GDP, but the budget for 2014 will be 0.087% of the GDP predicted in the economic forecast.

The bank employed three fewer people than in the previous year. The reductions in staff numbers were a result of reorganisation of the work of the bank, and also of the decision of the larger commercial banks to stop using the central bank's retail payments system, which will be closed at the end of January.

Salaries for staff at the central bank are to rise by an average of five percent but the reduction in staff numbers means that personnel costs will rise by 2.7% from last year to 8.9 million euros. The rise in salaries will make them roughly comparable to those for similar positions in the financial sector in Tallinn, where Eesti Pank competes for employees. The rise in salaries does not affect the salaries of the management, which are set by the supervisory board.

Spending on training, business travel and office expenses will be reduced by eight percent in total to one million euros.

The creation of European single banking supervision means that the number of business trips taken will rise by 20 to 550, but spending on travel will still fall as the average cost of each trip is planned to be 10% less than in the budget for the previous year. Hansson explained that the single banking supervision will create additional work and that in future additional staff may be needed to handle this.

The costs of various services have been reduced by seven percent to 7.2 million euros, with the major part of this coming from the fall in cash handling costs.

The central bank's infrastructure expenses will fall by eleven percent this year to around one million euros. The sale of the Kuressaare property in autumn contributed to the reduction in costs as it brought administrative and depreciation costs down.

Investments in fixed assets will fall in 2014 by five percent to 1.3 million euros. The largest investments this year will be in the completion of the renovation of the Sakala 4/6 building, and purchases of server computers and economic forecasting and data analysis software. The central bank will also update its cash processing software this year.

Eesti Pank's forecasts show that the revenues for this year for the central bank will be 31.6 million euros. The largest share of Eesti Pank's income comes from income related to the single monetary policy of the euro area. The bank also expects to gain income from management of foreign reserves and other operating revenues. The bank is expected to have profit of 10 million euros this year.

Eesti Pank and the other central banks of the euro area are responsible for maintaining price stability in the euro area. To do this, Eesti Pank must be independent, and for this reason the bank is not covered by the state budget.

Eesti Pank's operating revenues for 2013 will be published in the central bank's annual report in the first half of 2014. Reports for earlier years can be accessed from the bank's website: http://www.eestipank.ee/en/publications/series/annual-report

For further information:
Viljar Rääsk
Public Relations Office
Eesti Pank
Eurosystem
Tel: +372 668 0745, +372 527 5055
Email: [email protected]
Press enquiries: [email protected]