Fiscal Discipline Council (hereinafter - the Council) is an independent collegial body established to monitor the compliance with the rules of the fiscal discipline.
The Council has the responsibility for the following:
- monitor the compliance with the Fiscal Discipline Law (hereinafter - FDL) provisions in the budget framework law and the annual state budget law during their preparation, execution, and amendment;
- verify, if the fiscal balance and the expenditure growth provisions have been properly applied, including an independent assessment of the potential GDP and nominal GDP, and the calculation of the structural balance;
- monitor the compliance with the FDL conditions with the estimated summary fiscal indicators during the execution of the annual state budget law, the consolidated local government budget, and derived public person budgets;
- prepare opinion regarding the major departures from the balance condition permitted during a severe economic downturn;
- prepare an opinion on the fiscal safety reserve to counter the prevailing fiscal risks for the state;
- prepare a monitoring report for fiscal discipline and, if necessary, an irregularity report;
- prepare and submit to the Saeima and the Cabinet of Ministers opinions regarding issues of fiscal policy and macro-economic development, as necessary to ensure the compliance with the FDL;
- prepare the reports stipulated by FDL to assess and analyze the fiscal policy sustainability of the country.
Last modified : 20 November 2014
On 29 July 2016 the Ministry of Finance and the Fiscal discipline council updated the Memorandum of Understanding by adding more precise version about the obligations regarding the Fiscal discipline council recommendations (so called comply or explain principle), as well as with the assessment of deviations in accordance with the Fiscal discipline law.
On 2 August 2016, the Cabinet of Ministers approved the establishment of the Fiscal security reserve for the medium-term budget framework period (2017-2019). The Fiscal security reserve will be established in the amount of 0.1% of GDP, which is the minimum amount permitted by the Fiscal discipline law.
Fiscal Council will not approve next year budget without fiscal safety reserve. Interview with the Fiscal Council chairman Jānis Platais. More information available in Latvian at financenet.lv portal.
The Fiscal discipline council endorses the Ministry of Finance macroeconomic projections, particularly real and nominal GDP growth, potential GDP growth and output gap, inflation and GDP deflator, for 2017-2019.
The Council provides an opinion on the macroeconomic forecast.
The Government’s declaration includes a plan to increase tax revenues by 2020, primarily by limiting the shadow economy. Both studies and the publications of international organisations indicate that Latvia’s shadow economy is above average levels in the European Union. One of the factors that influences the size of the shadow economy is people’s attitude towards taxes and paying taxes. In cooperation with the social research centre Latvijas fakti a survey was conducted in order to ascertain people’s views on the abovementioned topics.