The decision of the Saeima to support additional expenditure with fiscal impact of 87 483 708 euro in 2019, 191 227 820 euro in 2020 and 314 599 953 euro in 2021 without compensatory measures, is a clear signal that the new government in its coming months of operation, and also at the adoption process of the state budget for 2019 will perform fiscal consolidation, i.e. will balance the revenue and expenditure of the state budget.

The Fiscal Council submits proposals for amendments to the Law on Budget and Financial Management related to compliance with budget expenditure ceilings and monitoring of expenditure ceiling changes.

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.

On 11 October 2018, the Latvian Fiscal discipline council endorses the macroeconomic forecasts developed by the Ministry of Finance, that the government will use to develop the Latvian medium-term budgetary framework 2019-2021. At the same time, the Council insists on the very strict respect for fiscal discipline, so that, at a time when rapid economic growth is taking place, the fiscal space will not be expanded.


On 13 December 2018 Fiscal discipline council received from the Ministry of Finance calculations of fiscal rules as well as on 19 December the interim budget for 2019 that has been prepared in accordance with Article 15 of the Law on Budget and financial management. In accordance with the Fiscal discipline law Council is responsible for the monitoring of compliance with FDL provisions in the annual state budget law and the medium-term budget framework law during their preparation, execution, and amendment. The Council has applied this regulation on the interim budget as well.

According to Article 29 Part 2 the Fiscal Council shall prepare a non-conformity report, including recommendations for the rectification of non-conformities if the Council detects infringements of the Fiscal Discipline Law. The non-conformity report shall be prepared as soon as the non-conformity has been detected, submitted to the Cabinet and Saeima, and published on the website of the Council and of the Ministry of Finance.

On 11 December, the Fiscal Discipline Council confirmed that there is no need to correct the structural balance in the general government budget, as the accumulated deviation of the actual structural balances from the balance sheet does not violate the permissible threshold (-0.5% of GDP) set by the Fiscal Discipline Law (FDL). The total accumulated difference between the balances as of the end of 2017 amounted to 0.8% of GDP.  However, the Council notes that the government must take steps to achieve the medium-term objective.

Fiscal discipline council submitted to the Saeima and the Cabinet of Ministers an opinion regarding amendments to the Law on the Health care financing adopted by the Saeima on 13 December, which stipulates that the financing of the healthcare sector should be increased by 20% as of 1 January 2019.

Today the Fiscal Discipline Council held a regular meeting on issues related to the technical state budget, planned amendments to the Law on Budget and Financial Management, and also considered the assessment of budget implementation for 2017 and discussed other issues in the field of fiscal discipline.

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