The Fiscal Discipline Council approved the Ministry of Finance's Latvian macroeconomic forecasts for 2020-2022, which are used as the basis for medium-term budget framework. Overall, the projections are realistic, but there are concerns about risks in the area of international trade and the reputation of the banking sector.

As always, also this year on 13 February there are shadows in the Fiscal Council. Two pupils who have excellently passed the pre-selection competition - the test about the basics of fiscal discipline - were in the Council today. Madara Vineta Stivriņa from Daugavpils State Gymnasium and Elizabete Kancēviča from Riga State 3rd Gymnasium - both were great help in our everyday duties. Big thanks go to the teachers!

The Fiscal Discipline Council concluded that the decisions taken on 5 and 8 February at the Cabinet of Ministers to reallocate savings from the budget programs, that are protected by the Fiscal Disciplne Law, violates the maximum expenditure ceilings according to the budget framework law for 2018-2020.

For better understanding of the cyclical changes in the economy, the Fiscal discipline council, like other European independent fiscal authorities, uses a visual to characterise the economic cycle - the so-called heatmap. This tool confirms that economic growth in Latvia is fast and exceeds its potential, therefore, the state budget fiscal balance has to be planed with a surplus.

Fiscal council by assessing the draft budgetary plan for 2019, highlights that unlike the other Baltic states, the Latvian government has not been able to create a counter-cyclical budget without a deficit. The Latvian budget plan for the coming year has a negative balance - 0.7% of gross domestic product. For both other countries, the budget balance is positive which means that budget revenues are projected to be higher than expenditure - 0.4% of GDP for Lithuania, and 0.5% of GDP for Estonia.

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The Fiscal Discipline Council approved the Ministry of Finance's Latvian macroeconomic forecasts for 2020-2022, which are used as the basis for medium-term budget framework. Overall, the projections are realistic, but there are concerns about risks in the area of international trade and the reputation of the banking sector.

As always, also this year there are shadows in the Fiscal Council. Two pupils who have excellently passed the pre-selection competition - the test about the basics of fiscal discipline - were in the Council today. Madara Vineta Stivriņa from Daugavpils State Gymnasium and Elizabete Kancēviča from Riga State 3rd Gymnasium.

The Fiscal Discipline Council concluded that the decisions taken on 5 and 8 February at the Cabinet of Ministers to reallocate savings from the budget programs, that are protected by the Fiscal Disciplne Law, violates the maximum expenditure ceilings according with the budget framework law 2018-2020.

Council meeting was held on 7 February 2019 in which the leading macroeconomic and fiscal policy experts of the Ministry of Finance participated. At the meeting were discussed the tax reform impact as one-off measure, as well as the most recent Latvia's macroeconomic forecasts, which will be the basis for the Latvia's Stability Programme 2019-2022.

Today, the government has started work on the state budget for 2019, examining economic development trends and the main parameters of public finances. After reviewing the report prepared by the Ministry of Finance, the Council concludes that the new government from the previous government has received the heritage with serious fiscal policy challenges. Already in the past, the Council noted a tendency for budget expenditure to grow at a much faster rate than fiscal conditions allow.

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