In the Surveillance report on Latvia’s Medium-term Budget Framework 2018-2020 the Council declined support for the deviation from the budget balance target to implement structural reforms in health care. The Council's position was that insufficient information had been provided about the reform and its impact on long-term growth prospects to justify the use of deficit financing.

In view of the information received from the Ministry of Health, which provides an overview of the way funds will be used and the results that have to be achieved, the Council withdraws its objection to the use of deficit financing to implement structural reforms in health care. The Council will continue to monitor progress on structural reforms in the healthcare system.

During the Cabinet meeting that took place on 21 November 2017 the Cabinet discussed an agenda item that foresees the reallocation of savings. The Council objects to the decision to reallocate savings. This decision reduces maximum permissible government expenditures for 2017 by 886 373 euro. The Council contends that the decision to allocate funds to the Funds for Unforeseen Events by reducing expenditures on State Debt Management programme creates a non-conformity with the Fiscal discipline law.

 

The budget execution results for 2017 will be positive, despite several recent decisions by the Government of Latvia to increase budget expenditure. With the pace of economic growth picking up, budget expenditure will not grow sufficiently to increase the wages of public sector employees at the same pace as the private sector. This will create new challenges, and decisions will have to be made regarding which priorities to finance with the limited funds available. The reduction of public debt by way of balanced budgets or budgets with a surplus will be an important task of fiscal policy in the near future. These are the conclusions of the Surveillance report, which was published on 5 October by the Fiscal discipline council.

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Representatives of the Economic and Financial Committee of the Parliament of Tajikistan staying in Latvia from 11 to 12 December to get acquainted with the experience of Latvia in fiscal policy and other economic development issues, which Latvia has accumulated as a member of the European Union. On 11 December 2017 representatives of the Fiscal Council shared with colleagues from Tajikistan their experience on fiscal discipline. The presentation of the Fiscal Council in Russian is available here.

According to Part 7, Section 28 of the Fiscal discipline law, the Fiscal discipline council shall prepare and submit to the Saeima and the Cabinet's attention its opinion on fiscal policy matters if the Council finds them important for compliance with the terms stipulated in the Fiscal discipline law. 

The Fiscal Council confirms that, in accordance with Article 11 of the FDL, no adjustment to the structural balance is necessary. The structural balance rule and the expenditure growth rule calculations for 2013-2016 indicate that a positive deviation buffer has been accumulated. However, the considerable impact of the cyclical component on the assessment of the structural balance and the impact of the GDP deflator's estimates on the calculation of the expenditure growth rule suggests the need for conservative fiscal policy.

Today we have talked about the deficit in the career day event "Sirup of professions" for Riga's schools at Riga Secondary school 25.

During the Cabinet meeting that took place on 21 November 2017 the Cabinet discussed an agenda item that foresees the reallocation of savings. The Council objects to the decision to reallocate savings. This decision reduces maximum permissible government expenditures for 2017 by 886 373 euro. The Council contends that the decision to allocate funds to the Funds for Unforeseen Events by reducing expenditures on State Debt Management programme creates a non-conformity with the Fiscal discipline law.

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