The next year's budget of Eesti Pank will decrease by a tenth

The 2010 budget of Eesti Pank will amount to 260.2 million kroons which is 10 per cent smaller compared to the budget of 2009.

Compared to the previous year, the central bank has made cuts in almost all fields. The long-term objective of Eesti Pank is to maintain the level of expenditure as a ratio to GDP comparable to earlier years. As the cash-related expenditure varies a lot across different years, these are excluded from the comparison.

In 2009, the central bank's budget volume was 0.116% of GDP. The same figure for 2010 is 0.115%. At the same time, the projected GDP for the year 2010 which is used as a basis of comparison is smaller than a year earlier.

The central bank's projected staff costs are almost a million kroons smaller compared to the previous year, amounting to 121.5 million kroons.

The next year's largest investments of the central bank are related to cash handling and information technology harmonisation with the euro area requirements.

Due to the financial and economic crisis, the interest rates in developing countries have fallen to levels from which any further falls are unlikely. Two possible developments - constantly small interest rates or a rise in interest rates - will both lead to a low level of returns on foreign exchange reserves of Eesti Pank. Thus, Eesti Pank's income will decrease to a large extent in 2010.

Eesti Pank is an independent constitutional institution that operates the Estonian monetary system. Due to the independent nature of the central bank which is necessary to maintain financial stability, Eesti Pank is not connected to the state budget nor held liable for the financial liabilities of the state, nor is the state held liable for the financial liabilities of the central bank. Eesti Pank finances its activities from the income earned from investing foreign exchange reserves.

The 2009 operating result of Eesti Pank will be published in the central bank's annual report in the first half of 2010. Previous annual reports are available at: www.bankofestonia.info/pub/en/yldine/juhtimine/finantsaruanded/.