ESTONIA: National Audit Office: Public-Sector IT Spending Has Doubled in Six Years

The National Audit Office’s newly published report reveals that the IT expenditure and investments of Estonian public authorities have doubled over the past six years, rising from €123 million to €257 million. The growth reflects both strategic decisions and broader market developments.

A major driver was the Government’s 2021 decision to allocate €30 million to strengthen cybersecurity, significantly boosting overall IT spending. Structural changes—including agency mergers, function transfers and the creation of the Estonian Information and Communication Technology Centre (RIT) in 2021—also played a substantial role. Rising hardware and software prices further contributed to the increase.

IT investments grew from €45 million to €83 million. The largest investment volumes came from the areas of government of the Ministry of Economic Affairs and Communications, the Ministry of Finance and the Ministry of Social Affairs. Notable high-cost projects included the Government Cloud (€11.09 million), the Register of Structural Support (€7.07 million) and the Election Information System (€5.69 million). Foreign funding accounted for 30–40% of total investment.

IT administrative costs—covering ongoing expenses such as hardware and software rentals, hosting and maintenance—also doubled, increasing from €38 million in 2019 to €77 million in 2024. When including management costs needed to operate IT units, the total rose from €37 million to €84 million. The highest administrative costs in 2024 were recorded at the IT and Development Centre of the Ministry of the Interior (SMIT).

Staff-related costs grew even more rapidly, rising from €40 million to €97 million over six years. Costs for ministries and agencies (excluding IT units) nearly tripled, while staff expenditures in IT units more than doubled. The number of employees in IT units increased from 1,064 to 1,743, and average gross monthly wages rose from €2,621 to €3,481, matching ICT sector averages. The largest IT units in 2024 were SMIT, the State Information System Authority (RIA) and the Centre of Registers and Information Systems (RIK), with RIA reporting the highest average salaries.

Despite significant increases, the National Audit Office notes that IT spending still falls short of the levels ministries themselves consider necessary, indicating that development needs exceed available funding.

The overview covers IT expenditure from 2019–2024, offering the first comprehensive cross-government analysis of its kind. Until now, no central summary has been produced by the Ministry of Justice and Digital Affairs, and the national budget does not present this information in an accessible form. Although detailed financial data exist in the state’s accounting systems, they had not been systematically analysed.

According to the National Audit Office, this information is essential for transparency, understanding how public money is used, and supporting better-informed management decisions across the public sector’s IT landscape.

Link to the audit report (in Estonian): https://www.riigikontroll.ee/auditiaruanded/riigiasutuste-infotehnoloogia-investeeringud-ja-kulud