Fiscal Discipline Council has approved the macroeconomic forecast for 2018 to 2021 prepared by Ministry of Finance, which will be further used by the government in consultations with the European Commission during the budget preparation for the next year. The Council sees the macroeconomic forecast as realistic, however, there are concerns regarding the potential growth of economy, which could turn out to be lower than currently forecasted by the MoF. In this case, economic growth could slow down and there will be less available financial resources to cover expenditure.

Our "shadow" Edvards Kalniņš (Rīgas Franču licejs) shared his experience at the Council: ""Shadowing" the Council of Fiscal Discipline, I learned about the history and basic function of this institution, and also tried to understand the creative work approach of macro-economists, their work day and the duties to be performed. I participated also and understood the order of organization of the press conference and the necessary preparations."

During the Cabinet meeting that took place on 30 January 2018 the Cabinet adopted the conceptual report on "On the proposals of the Cooperation Platform "Demogrāfisko lietu centrs" (Demographic Affairs Center) in support of families with children in 2018-2020". Specifically the Cabinet accepted a proposal that allows reallocation of funds earmarked for the state family benefits for the purposes of implementing other priority measures proposed by the Demographic Affairs Center, if any savings in this budget category are identified.  Any expenditure savings achieved in the budget estimates for the categories listed under the Article 5(1) of the Fiscal Discipline Law is reducing expenditure ceilings thus making any reallocation of expenditure a breach of the requirements of the Fiscal Discipline Law.

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.

Fiscal sustainability refers to the ability of a government to maintain its current revenue and expenditure policies, without failing to meet its commitments and obligations, or leading to an unmanageable growth of public debt. Analysis conducted this year indicates that both the provision of public services and public debt service will create challenges.

News

Fiscal Discipline Council has approved the macroeconomic forecast for 2018 to 2021 prepared by Ministry of Finance, which will be further used by the government in consultations with the European Commission during the budget preparation for the next year. The Council sees the macroeconomic forecast as realistic, however, there are concerns regarding the potential growth of economy, which could turn out to be lower than currently forecasted by the MoF. In this case, economic growth could slow down and there will be less available financial resources to cover expenditure.

Fiscal discipline council as one of its tasks has also stated public education and knowledge-sharing, which is an essential element of good governance. In Latvia it is now already became as a tradition the so-called "Shadows day". It is a good opportunity to address the audience of secondary school pupils, allowing them to take part in the daily work and get to know professionals who work at the Council. This year Council secretariat has also two "shadows" – Dārta Plato and Edvards Kalniņš.

 

Council meeting was held on 9 February 2018 in which the leading macroeconomic experts of the Ministry of Finance participated. At the meeting were discussed the most recent Latvia's macroeconomic forecasts, which will be the basis for the Latvia's Stability Programme 2018-2021.

Also this year, the Cabinet of Ministers continues its action, which was initiated last year, in which the decisions taken by the Government intend to spend saved resources on those budget programs that are especially protected. Article 5 of the Fiscal Discipline Law establishes state budget programs in which savings mean a reduction in the maximum budget expenditures, rather than the possibility of reallocating financial resources to other Government needs.

On 2 February 2018 Fiscal discipline council GDP working group meeting was held with participation of the Bank of Latvia experts. The GDP working group discussed the topicalities of macroeconomic development in Latvia, paying particular attention to the issue of the potential GDP growth in Latvia in the coming years.

Older news