Evaluating the Latvia's Stability Programme 2019-2022 Fiscal discipline council concluded that the government did not envisage a sufficiently rigorous fiscal policy stance.

Instead of reducing budget expenditures due to reduced revenue because of the tax reform, the Stability Programme expects expenditure to increase. It creates a dangerous precedent that a similar one-off effect can be attributed to additional spending on education, research and infrastructure. The Council therefore calls on the government to correct this approach.

 

In accordance with the Law on the state budget 2019, as well as the scope of indicators stated in the Fiscal discipline law, Fiscal discipline council endorses macroeconomic indicators forecasts developed by the Ministry of Finance. Once in a quarter the Council prepares a report on the comparison of actual outcomes with the forecasts. Quarter I of 2019, including MS Excel tables.

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.

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The Fiscal Discipline Council (Council) generally commends the work of the Ministry of Finance in preparing the 2020 budget framework, which began in government on Tuesday. However, the impact of the tax reform remains substantial and the compensatory measures are inadequate. Therefore, the Council considers that, in line with the requirements of the Fiscal Discipline Law (FDL), next year's budget expenditure should be reduced by EUR 94 million in comparison to the draft budget presented. This opinion was presented to the Cabinet of Ministers on Tuesday by the Chairman of the Council, Janis Platais.

WG on Fiscal Risks 21 August 2019

FDC: government's decision to establish fiscal security reserve in amount of 0.1% of GDP in 2020 is sufficient.

 25 June 2019

That day the Council held a regular meeting, where leading macroeconomy experts of the Ministry of Finance took part. They discussed the latest macroeconomic forecasts of Latvia, which will be used as the basis for 2020 state budget, as well as for 2020-2022 medium-term budgetary frameworks.

 17 June 2019

Only a fifth or 18% of the respondents in Latvia follow the state budget, but 82% do not do so, according to a survey conducted in April 2019 on the state budget discipline. Comparatively, in 2016, this interest was 25%, 21% in 2017 and 19% in 2018.

Fiscal Council is seeking to recruit secretariat staff members. More information available here in Latvian.

On 14 May 2019, the Fiscal Council concluded a competition for the position of Secretary of the Council, signing an agreement with Ivars Golsts. In the open competition, the Fiscal Council recognized him out of the five candidates as the most appropriate.

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