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News
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Fiscal risks working group approves fiscal security reserve in the amount of 0.1% for year 2021 as adequate.
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Crisis Monitoring Report No1
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When spring is in nature, the Latvian economy has entered an “economic winter”, in an interview with the LV portal, the chairman of the Fiscal Discipline Council, Professor Dr. habil. oec. INNA STEINBUKA. Although the duration of the emergency is unknown and difficult to predict at present, she is already proposing a strategy for overcoming the crisis, which should include support for companies that will be the drivers of future development. It is important not only to 'hibernate' the situation, but also to overcome the crisis with maintained growth potential.
Read all (in Latvian).
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Fiscal discipline council (Council) welcomes the actions taken by the Latvian government aimed at overcoming crisis caused by Covid-19. However, the support measures must be balanced with budget resources and state’s ability to borrow – and they must not cause fiscal instability in medium and long term, in accordance with Council’s recommendations submitted to the Crisis management board.
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On March 12, the first meeting of the newly elected Fiscal Discipline Council was held to assess the potential impact of the Covid-19 coronavirus on Latvia's economy and state budget.
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The Saeima approved two new members of the Fiscal Discipline Council (FDP) on Thursday. Martins Abolins, an economist at Citadele Bank, and Andrejs Jakobsons, a lecturer at Riga Business School of RTU, will start their work in the Council.
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On Friday, February 21, international credit agency "S&P Global Ratings" upgraded Latvia's rating to historicaly high level "A+", while maintaining a stable outlook.
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The Council considers that the MoF macroeconomic projections for the period 2020-2023 are realistic and acceptable, but points to a number of risks, in particular in 2021/22.
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On Tuesday, December 17, the Fiscal Discipline Council elected Mrs Inna Šteinbuka to serve as its chair for the next three years.
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The Fiscal Discipline Council (FDC) is opposed to the proposal to use the budget deficit as a source of funding to raise salaries for medical staff.
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The Council had its meeting on November 14 to discuss research priorities and strategy for 2020, as well administrative issues.
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The Fiscal Discipline Council has prepared a non-compliance report finding violation of the Fiscal Discipline Act by the government's decision to reallocate 8.1 million euros in unspent funds in the 2019 budget.
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The Council presented their view to Saeima on 2020 budget on 22 October, 2019. Presentation here.
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Fiscal Discipline Council: The best use of seized proceeds is to reduce the government deficit
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Fiscal Discipline Board: Government has to consider bigger safety cushion for stability in future.
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On September 26, 2019, a meeting of the Fiscal Discipline Council was held to discuss issues of Latvian economy, which will be eleborated in Council's Annual Surveilance Report. It will be launched in the first half of October. Issues relating to the administrative functioning of the Secretariat were also discussed at the meeting.
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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.
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FDC: government's decision to establish fiscal security reserve in amount of 0.1% of GDP in 2020 is sufficient.
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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.
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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.
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Fiscal Council is seeking to recruit secretariat staff members. More information available here in Latvian.
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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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The Fiscal Council has prepared the addendum to its interim report, responding to the press release of the Ministry of Finance of 24 April 2019 on the 2019-2022 Latvia's Stability Programme full compliance with the Fiscal Discipline Law.
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Fiscal council meeting was held on 8 May 2019. At the meeting were held interviews with the candidates for Fiscal council secretary position and discussed the Council's answer to the MoF about the fiscal discipline surveillance interim report.
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Evaluating the Latvia's Stability Programme 2019-2022 Fiscal discipline council concluded that the government did not envisage a sufficiently rigorous fiscal policy stance.
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Fiscal discipline council is seeking to recruit secretary. More information available here in Latvian.
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Fiscal council meeting was held on 5 April 2019. At the meeting were discussed fiscal rules calculations, which will be the basis for the Latvia's Stability Programme 2019-2022.
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According to Part 7, Section 28 of the Fiscal discipline law, the Fiscal discipline council shall prepare and submit to the Saeima and the Cabinet's attention its opinion on fiscal policy matters if the Fiscal discipline council finds them important for compliance with the terms stipulated in the Fiscal discipline law.
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The Fiscal Council finds the government's effort on the 2019 State budget insufficient to ensure that fiscal indicators are consistent with sustainable development needs and overcome pro-cyclical fiscal stance. The Council recognizes the existing legal framework insufficient to justify the solutions included in the 2019 national budget, and suggests that the government develops and approves an additional regulations for the treatment of compulsory (non-discretionary) expenditure and revenue as well as one-off measures in the calculation of fiscal conditions.
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Fiscal council chairman Jānis Platais sharing joined experiences with CPB Netherlands Bureau for
Economic Policy Analysis on costing exercises at European Fiscal board seminar on independent fiscal institutions in EU. Joined presentation available here.
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Fiscal discipline council is seeking to recruit fiscal risks expert. More information available here in Latvian.
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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.
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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.
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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.
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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.
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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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On 30 January 2019 this year's first GDP working group meeting was held together with experts from the Bank of Latvia.
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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.
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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.
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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.
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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.
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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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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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Fiscal discipline council opinion regarding the amendments to the Law on Budget and finance management sent to the Saeima. Available here.
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Fiscal discipline council opinion (No 1-08/1473) regarding the amendments to the Law on Budget and finance management sent to the Saeima Budget and finance (tax) committee and the Cabinet of Ministers. Available here.
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The Chairman of the Fiscal Council, Jānis Platais, gives a lecture at the Latvian Economic Development Forum on the role of fiscal discipline ensuring sustainable economic development. Lecture presentations available here in Latvian. At the end of the lecture, the Chairman of the Council has invited students to practice at the Fiscal discipline council. Students are welcome in practice!
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Today Fiscal discipline council held a regular meeting on issues related to the proposed amendments to the law on budget and financial management and looked at the prospects for fiscal development.
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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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In addition to the non-conformity report sent by the Fiscal Council on 23 October about the decisions taken by the Cabinet on that day, the Council would like to highlight that in the same meeting the Cabinet adopted an agenda's item that foresees the redistribution of funds to the budget programme 02.00.00 "Funds for unforeseen events" (budget line "74 Funds for redistribution during the state annual budget implementation process") from the Ministry of Welfare budget sub-programmes in the amount of 5 465 000 euro.
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The Fiscal Discipline Council concluded that the decision taken on 23 October at the Cabinet of Ministers to reallocate savings from the budget sub-program "State Social Benefits" of the Ministry of Welfare did not comply with the Fiscal Discipline Law, as such a decision exceeds the maximum expenditure ceilings for 2018.
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The Council press release is available in Latvian.
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On 11 October 2018 Saeima approves Mrs Inna Šteinbuka as the Fiscal council member. More information available in Latvian here.
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Council meeting was held on 20 September 2018 in which the experts of the Ministry of Finance participated.
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On 7 September 2018 this year's third GDP working group meeting was held with participation of the Bank of Latvia experts. Working group discussed the trends in the macroeconomic development of Latvia, incl. labor market issues, as well as potential GDP and output gap issues.
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The Fiscal Council disagrees with the redistribution of funds in the law-protected budget program. More information available in Latvian.
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The Fiscal discipline council, for the first time in Latvia, has conducted a survey of Latvia's largest parties on the fiscal impact of their pre-election promises before the forthcoming Saeima elections. The Council has founded that political parties express a responsible attitude towards the public finances.
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Why people should not be indifferent to the public debt, how it affects our daily lives, and why the borrowed money should be taken with the responsibility - these and other issues related to the public debt will be opened for the discussion at this year's Lampa conversation festival at the panel organised by the Fiscal discipline council.
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On 12 June 2018 this year's second GDP working group meeting was held with participation of the Bank of Latvia experts. Working group discussed the trends in the macroeconomic development of Latvia, incl. financial sector non-resident banks and labor market issues.
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Council meeting was held on 12 June 2018 in which the experts of the European Court of Auditors and the Ministry of Finance participated.
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On 11 June 2018, in Rīga, at EU house, the Baltic-Nordic independent fiscal institutions for the fourth time. At their annual meeting each institution has shared their topical issues and received immediate and valuable comments from their colleagues of the neighbouring countries.
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A meeting of the Fiscal Risks Working Group of the Fiscal Discipline Council took place on 9 May 2018. Representatives from the Cross-Sectoral Coordination Centre, from the Ministry of Economics and JSC Latvenergo, as well as from the Ministry of Finance. During the meeting the information was received about the risk management mechanisms, and the discussion continued on the quantification of these fiscal risks in the fiscal risk declaration.
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The Fiscal Discipline Council's public-private partnership (PPP) project study concluded that the growing interest in PPP projects that effectively enable the development of important infrastructure and services, the government should focus more on the risk assessment of PPPs in order not to cause significant losses to the state budget in the future.
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The latest data on the government deficit and government debt from the Central Statistical Bureau indicates that the budgetary outcomes are better than the planned for 2017, however the government needs to focus more quickly on a balanced budget, targeted at lowering the high government debt burden, the Fiscal Discipline Council.
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Evaluating the proposed Latvia's Stability Program for 2018-2021, Fiscal Council has concluded that the Government continues to implement responsible fiscal policy and in general respects the requirements of fiscal discipline. Meanwhile, the Council highlights a significant expansion of the fiscal policy plans compared to 2015 and 2016, which is not in line with the current favourable economic conditions and facilitates pro-cyclical directions (additionally warming economy and not reducing state debt). This has been recognised by the Fiscal Council in their annual interim report, which was published on Monday (9 April) and submitted to the Cabinet of Ministers.
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Council meeting was held on 6 April 2018. At the meeting were discussed fiscal rules calculations, which will be the basis for the Latvia's Stability Programme 2018-2021, as well as adopted the Council interim report (opinion).
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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.
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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.
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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.
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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.
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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.
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A meeting of the Fiscal Risks Working Group of the Fiscal Discipline Council took place on 31 January 2017. The meeting was attended by representatives from the Ministry of Finance. The Fiscal Risks Working Group draws attention to the expenditure benchmark and the need to improve the fiscal risks associated with public private partnership projects.
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There are changes in the Fiscal council secretariat. More information available in Latvian.
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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.
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Fiscal Council chairman Jānis Platais participates in the discussion on culture financing with the culture leading experts. Presentation available in Latvian here.
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Representatives of the Economic and Financial Committee of the Parliament of Tajikistan staying in Latvia from 11 to 12 December to get acquainted with the experience of Latvia in fiscal policy and other economic development issues, which Latvia has accumulated as a member of the European Union. On 11 December 2017 representatives of the Fiscal Council shared with colleagues from Tajikistan their experience on fiscal discipline. The presentation of the Fiscal Council in Russian is available here.
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According to Part 7, Section 28 of the Fiscal discipline law, the Fiscal discipline council shall prepare and submit to the Saeima and the Cabinet's attention its opinion on fiscal policy matters if the Council finds them important for compliance with the terms stipulated in the Fiscal discipline law.
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The Fiscal Council confirms that, in accordance with Article 11 of the FDL, no adjustment to the structural balance is necessary. The structural balance rule and the expenditure growth rule calculations for 2013-2016 indicate that a positive deviation buffer has been accumulated. However, the considerable impact of the cyclical component on the assessment of the structural balance and the impact of the GDP deflator's estimates on the calculation of the expenditure growth rule suggests the need for conservative fiscal policy.
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Today we have talked about the deficit in the career day event "Sirup of professions" for Riga's schools at Riga Secondary school 25.
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During the Cabinet meeting that took place on 21 November 2017 the Cabinet discussed an agenda item that foresees the reallocation of savings. The Council objects to the decision to reallocate savings. This decision reduces maximum permissible government expenditures for 2017 by 886 373 euro. The Council contends that the decision to allocate funds to the Funds for Unforeseen Events by reducing expenditures on State Debt Management programme creates a non-conformity with the Fiscal discipline law.
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Fiscal discipline council announced communication services procurement. Procurement application's deadline is 1 December 2017 10:00 o'clock. More information available in Latvian here.
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During the Cabinet meeting that took place on 17 October 2017 the Cabinet discussed an agenda item that foresees the reallocation of savings. The Council objects to the decision to reallocate savings. This decision reduces maximum permissible government expenditures for 2017 by 1 008 000 euro. The Council contends that the decision to allocate funds to the Ministry of Education and science and the Ministry of Transport by reducing expenditures on payments to the EU budget creates a non-conformity with the Fiscal discipline law.
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The budget execution results for 2017 will be positive, despite several recent decisions by the Government of Latvia to increase budget expenditure. With the pace of economic growth picking up, budget expenditure will not grow sufficiently to increase the wages of public sector employees at the same pace as the private sector. This will create new challenges, and decisions will have to be made regarding which priorities to finance with the limited funds available. The reduction of public debt by way of balanced budgets or budgets with a surplus will be an important task of fiscal policy in the near future. These are the conclusions of the Surveillance report, which was published on 5 October by the Fiscal discipline council.
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Council meeting was held on 4 October 2017. The main agenda items were (i) the main topics to be covered in the Fiscal discipline surveillance report and (ii) developments regarding the non-conformity reports that were published in September.
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During the Cabinet meeting that took place on 19 September 2017 the Cabinet discussed an agenda item that foresees the reallocation of savings from the budget sub-programmes "Payments to the budget of the European Community" and "State debt management" reducing them for 4 010 609 euro and 96 216 euro accordingly.
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During the Cabinet meeting that took place on 14 September 2017 the Cabinet discussed an agenda item that foresees the reallocation of savings from the budget sub-programme “Payments to the budget of the European Community” to the sub-programmes of the Ministry of Health’s budget programme 33.17.00 “Emergency medical aid provision at hospitals”. A total of 16 400 000 euro are reallocated.
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Successfully ended procurements for expert consultations. More information available in Latvian here.
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During the Cabinet meeting that took place on 5 September 2017 the Cabinet discussed an agenda item that foresees the reallocation of savings from the budget sub-programme “Payments to the budget of the European Community” to the sub-programmes of the Ministry of Transport’s budget programme “Public transport”. A total of 19 046 489 euro are reallocated.
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A Fiscal discipline council meeting took place on 4 September 2017. The main item of discussion was the list of topics that should be covered in detail in the annual Monitoring report. The report will be published in October. Other items of discussion were (i) the research agenda for 2018 and (ii) cooperation with experts who were engaged as part of the procurement procedure.
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On 24 August 2017 the Fiscal discipline council (Council) informed the media about the endorsement of the Ministry of Finance’s macroeconomic forecasts, and indicated that they are realistic. However, the macroeconomic forecast confirmed the suspicion that the economy is heating up. This requires cautious fiscal policy (the establishment of fiscal reserves and the reduction of public debt), rather than fiscal expansion. The Council notes that the Government consistently uses all the available options to deviate from the budget deficit target stipulated in the Fiscal discipline law – 0.5 of GDP.
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Fiscal discipline council announced research procurement. Procurement application's deadline is 4 September 2017 10:00 o'clock. More information available in Latvian here.
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The annual opinion survey on budget discipline was carried out in April 2017, in cooperation with the social research centre SKDS. The report presents the results of the survey, which (i) provide insight into public opinion on issues related to fiscal policy and sustainability, and (ii) raise questions that have to be addressed in the fiscal sustainability report currently being prepared by the Council.
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The Fiscal Discipline Council has identified a possible non-conformity with Section 9 of the Fiscal discipline law that could be rectified upon passing a new medium-term budget framework.
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On 16 June 2017 in Tallinn, at National Central Bank of Estonia, for the third time there have met Baltic-Finnish Independent Fiscal discipline institutions. At the annual meeting there have been discussed topical issues of the budget and fiscal policy analysis process of our neighbouring countries.
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Fiscal discipline council announced research procurement. Procurement application's deadline is 25 July 2017 17:00 o'clock.
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On 6 June the Fiscal discipline council (hereafter – Council), in cooperation with the European Commission Representation in Latvia, organised a discussion on fiscal sustainability and the role of the public sector in stimulating economic growth and social welfare. As a result of the discussion, it was concluded that the current level of tax revenues is insufficient to meet the needs of the country and there is a risk that the level of public debt will increase.
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After receiving and discussing the report from the State Audit Office (approved on 26 April), which claims that the Council has exceeded its institutional mandate by hiring three full-time experts, the Council acknowledges the existence of a legal problem and, in cooperation with the Ministry of Finance and the Saeima, will attempt to resolve it as soon as possible. The Council stresses that the problem arose due to the fact that the execution of its functions objectively requires more than one full-time employee. This has also been acknowledged by the Ministry of Finance and the Saeima.
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The Council press release is available in Latvian.
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The Fiscal Discipline Council agrees that a tax reform is necessary, and the Council will address this issue in detail on 17 May when additional information will have been obtained regarding the quantitative estimates. The Council stresses that it will monitor whether there are non-conformities with the stipulations of Section 9 of the Fiscal Discipline law.
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The main conclusions regarding the expenditure ceilings for 2018 have not been modified. In view of the fact that the Cabinet has not yet discussed the conceptual report On the reform of the health care system and the tax reform is still in development, the Council's calculations differ by the cumulative amount of both deviations from the budget deficit target (249.2 million euro).
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Despite the annual growth rate of Latvia’s economy reaching an average of 3.3% between 2011 and 2016, public debt has increased by 1.37 billion euro (1.09 billion was used to finance the general government deficit). This corresponds to a per capita increase of 921 euro (from 4 178 to 5 098 euro) and per employed person increase of 1331 euro (from 10 310 to 11 641 euro).
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The Fiscal Discipline Council has analysed the most important plans that have been included in Latvia’s Stability Programme 2017-2020. Decisions that bear on tax policy, the reduction of unemployment and health care have been assessed. The Council has endorsed and the macroeconomic development scenario used as the basis for drafting the budget and looked into key fiscal rule issues. However, the Council is concerned that government expenditure is increasing more rapidly than the economic growth potential.
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On 6 April 2017 in the 9th Annual meeting of the OECD network of Parliamentary budget officials and independent fiscal institutions Latvian Fiscal discipline council chairman Jānis Platais has provided the presentation on the Council experience.
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The Fiscal Discipline Council, in cooperation with the European Commission Representation in Latvia, is organising an expert discussion on the tax policy reform proposed by the Ministry of Finance. The purpose of the discussion is to consider whether the implementation of the reforms proposed by the Ministry of Finance will ensure the achievement of tax revenue targets.
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Fiscal discipline council is looking for the expert in macroeconomics. More information available in Latvian.
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On 16 February 2017 the Fiscal Discipline Council endorsed the Ministry of Finance’s macroeconomic projections that will be used as the basis for drafting next year’s budget. An early review and endorsement of the MoF’s macroeconomic projections by the Council has been agreed upon to support the effort of the Government during the preparation of annual documents - the stability programme and the medium-term budget framework.
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Today we have splendid followers that we are expecting in the future for the work in public administration!
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A Fiscal discipline council meeting took place on 9 February 2017. The meeting was attended by representatives from the Ministry of Finance, who informed Council members about the latest macroeconomic forecasts that will be used when preparing Latvia’s Stability programme 2017-2020. Questions relating to public expenditure on health care were also addressed during the meeting. Special attention was paid to the long-term financing needs of the health care sector.
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Announced procurements on the yearly surveys and expert consultation on fiscal forecasts
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Yesterday during a gross domestic product working group meeting, with participation of the Bank of Latvia experts, Fiscal discipline council discussed the trends in the macroeconomic development of Latvia.
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Opinion article by Chairman Jānis Platais on the first three years of the Fiscal Council work available in Latvian.
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A meeting of the Fiscal Risks Working Group of the Fiscal Discipline Council took place on 31 January 2017. The meeting was attended by representatives from the Ministry of Finance. The main items of discussion were the conditions for the reallocation of appropriations, improvements to the monitoring of fiscal risks and budget revenue execution trends.
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In accordance with Section 26, Part 1 of the Fiscal discipline law, the Council re-elected Jānis Platais to the position of Chairman, and Ingars Eriņš to the position of Vice-Chairman. The law allows for a re-appointment for a period of three years.
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Based on data published by the Treasury, in 2016 the consolidated government budget balance was - 101,7. This is better than the outturn forecasted when the 2016 budget was approved (-341,9 million euro). Positive deviations are also evident with regard to the execution of the revenue plan. Based on data published by the State Revenue Service, revenues exceeded the planned amount by 88.3 million euro.
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Today, on 22 December 2016, Saeima has approved Mārtiņš Kazāks and Morten Hansen for the second in Fiscal Council.
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Today Fiscal Discipline Council publishes a brief summary on the key developments in 2016, and expresses support to two of its members, who are invited to the discussions in the Saeima Budget and Finance (Taxation) Committee regarding their potential reappointment as Fiscal Discipline Council members for a second term.
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According to Article 28 Part 7 of the Fiscal Discipline Law, the Fiscal Discipline Council shall prepare and submit to the Saeima and the Cabinet's attention of fiscal policy matters, where it finds them important to comply with the Fiscal Discipline Law terms.
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In the final meeting of 2016 the Council met with representatives from several Ministry of Finance’s departments: Fiscal policy department, Economic analysis department and Tax analysis department. In addition, the Council discussed the Ministry of Finance’s reply to the irregularity report issued by the Council.
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This new section "Knowledge" contains educational materials for public use. The Latvian version also contains two surveys (one on fiscal discipline for students) and one on tax morale, and a presentation that can be used as teaching material for high-school students.
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As a result of the most recent financial crisis, government debt levels increased dramatically in Latvia and the European Union more generally. The Fiscal Discipline Law stipulates that government debt should not exceed 60% of GDP. This is one of the four fiscal rules that have to be observed when planning and executing the state budget.
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According to Part 1, Section 28 of the Fiscal discipline law, the Fiscal discipline council shall monitor whether the medium term budget framework law and the annual state budget law are prepared and implemented in compliance with the fiscal rules stipulated in the Fiscal discipline law.
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The Council commissioned two public opinion surveys in the first half of 2016. The first studied the attitude of Latvia’s inhabitants towards paying taxes (carried out by Latvijas fakti). The aim of the second survey was to ascertain people’s opinion on issues pertaining to fiscal policy and budget discipline (carried out by SKDS).
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"The Fiscal Discipline Council agrees that structural reforms in education should be a government priority. Improved quality of education can lead to increased productivity, which is currently one of the major obstacles to the country’s economic development and convergence to the EU average", argues Council member Morten Hansen.
"Nonetheless, the budget deficit and, consequently, public debt should not be increased to implement these reforms, especially since the funds aim at raising salaries and not to pay for structural reforms per se. This is not a one-off measure and will permanently increase expenditures. Other sources of funding are possible, without raising the budget deficit. One option is to look for available resources within the education sector itself; this would be preferable, as overall public funding for education in Latvia is higher than the EU average. Another option would be to compensate expenditures by finding ways to increase revenues, without deviating from the budget balance target and increasing the budget deficit", Morten Hansen explains.
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Today we have talked about the deficit in the seminar for state institutions employees and also in the career day event "Sirup of professions" for Latgales suburb schools at Riga Secondary school 25.
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Announced procurement on the communication services till 4 November 2016.
More information available in Latvian here.
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The Latvian Government is broadly compliant with the principles of fiscal discipline, but both 2014 and 2015 saw negative deviations from balance targets set in legislation. This is the conclusion of the Fiscal Discipline Council's annual Surveillance Report, which was published on 6 October.
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On 1 June 2016 the Fiscal discipline council, in cooperation with the Representation of the European Commission in Latvia, organised an international conference The Fiscal discipline law: The first three years and future prospects. The purpose of this conference was to improve public understanding of budget discipline by holding a public discussion before the Government commenced work on the 2017 state budget. Below is a video summary of the conference and the main issues discussed at the event.
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During the meeting that took place on 2 September 2016, the Fiscal Discipline Council discussed the budget planning process, the changes in the macroeconomic environment as a result of the referendum to leave the European Union held in the United Kingdom on 23 June, and the impact of the result on the macro-fiscal environment in Latvia.
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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.
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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.
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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.
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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.
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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.
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On 10 June 2016, the Fiscal Discipline Council endorsed the Ministry of Finance’s macroeconomic projections that will be used as the basis for drafting Latvia’s medium term budget framework 2017-2019. Early review and endorsement of the MoF’s macroeconomic projections by the Council has been agreed to support the effort in the Government in preparation of annual documents - the stability program and the medium-term budget framework.
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Today during the Fiscal Discipline Council meeting, the macroeconomic trends and forecasts for the coming years were discussed with the Ministry of Finance representatives.
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On 2 June 2016 Baltic independent institutions met for the second time. This year meeting was at the State Audit Office of the Republic of Lithuania, which is the Lithuanian independent fiscal institution. Baltic experts have exchanged the experience about the macroeconomic and fiscal policy issues. Lithuanian colleagues informed about their plans to issue fiscal sustainability report at the end of June 2016. Starting from this year the report will be published regularly. Next year meeting of the Baltic independent institutions will be held in Estonia.
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Today the Fiscal discipline council in cooperation with the Representation of the European Commission in Latvia are organising an international conference The Fiscal discipline law: The first three years and future prospects. The purpose of this conference is to improve public understanding of budget discipline by organising a public discussion among professionals before the Government commences work on the 2017 state budget.
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On 31 May 2016, the second GDP working group meeting was held. Council members discussed current demographic and labour market trends, as well as economic developments in Latvia in general with professor M.Hazans and Bank of Latvia representative I.Kasjanovs.
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Fiscal council chairman Jānis Platais participates in the public discussion "To save or not to save" at Saeima. More information available in Latvian here.
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The Council press release is available in Latvian.
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A meeting of the Fiscal Risks Working Group of the Fiscal Discipline Council took place on 11 May 2016. The meeting was attended by representatives from the Ministry of Finance. The main items of discussion were the risks included in the Statement of Fiscal Risks and the procedures for their assessment. The possibility of including hitherto undescribed risks was also discussed, as this would provide a more complete understanding of the factors that can negatively affect the budget balance.
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In accordance with the Fiscal Discipline Law the Council monitores the implementation of the annual State budget law from the revenues side, taking as the source State Revenue service revenues data and the implementation of the annual State budget law from expenditures side, taking as the source Treasury data. Once in a quarter the Council prepares a quarterly report on the implementation of the revenues and expenditures side and a quarterly report on the resource allocation from "Funds for Unforeseen Events".
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The Council carried out a self-assessment at the beginning of 2016, based on Organisation for Economic Co-operation and Development (OECD) guidelines for independent fiscal institutions. It was concluded that the Council broadly conforms to OECD criteria, but a consistent approach to communication with the media and the public could strengthen the Council’s influence on public debate and an assessment by an external observer could improve the Council’s work.
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The Fiscal discipline council (FDC) contends that increasing the budget deficit creates a risk for the sustainability of government finance, as there will be insufficient reserves for when the economy enters a downturn.
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Today, the Fiscal Discipline Council published its opinion on Latvia's Stability Programme for 2016-2019. This report has been submitted to the Parliament, the Cabinet of Ministers and the Ministry of Finance, and published on the websites of the Council and the Ministry of Finance.
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On 5 April 2016 Fiscal council Chairman Jānis Platais met with the Latvian Pensioners federation Pension committee Chairman Jānis Felsbergs. Meeting presentation is available here in Latvian.
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Published Fiscal council annual report 2015 (available in Latvian).
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Announced procurement on the survey organisation services till 1 April 2016.
More information available in Latvian here.
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Announced procurement on the event organisation services till 29 March 2016.
More information available in Latvian here.
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On 19 February 2016, the Fiscal Discipline Council endorsed the Ministry of Finance's macroeconomic projections that will be used as the basis for drafting Latvia’s Stability Programme 2016-2019. Early review and endorsement of the Ministry of Finance's macroeconomic projections by the Fiscal Council has been agreed to support the effort in the Government in preparation of annual documents - the stability program and the medium-term budget framework.
Fiscal Council opinion available here.
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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" - Ieva Kruzmane and Eduards Osis.
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On its first meeting Fiscal council presents the diplomas for Mrs Iveta Godaine, Real estate manager for the building in Riga, Smilšu Street 1, for Mrs Agnese Ādmīdiņa, Senior public sector customer manager, for Mr Aivars Mirkšs, Construction administration Construction project manager for their intensive assistance related to the Council office repair and maintanance, incl. help with public procurement procedures and excellently timely performed repairing service.
The Council’s meeting main topic was the endorsement of macroeconomic forecasts prepared by the Ministry of Finance. The Council will publish its opinion on forecasts by the Ministry of Finance no later than on 12 February.
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On 8 February 2016 Fiscal Council and the Ministry of Finance signed the Memonrandum of Understanding (available here)
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Announced procurement on research and consultation till 16 February 2016. More information available in Latvian here.
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On 29 January 2016 this year's first Fiscal Discipline Council (Council) GDP working group meeting was held. Council members concluded that risks for macroeconomic imbalances are present, which in the future can endanger both economic growth and compliance with the Fiscal discipline law. Namely, wages have been growing faster than productivity for couple of years already, and in case this trend continues to prevail, export competitiveness is going to deteriorate. At the same time, investment sector is still fragile despite showing some growth in the middle of last year after two years of stagnation.
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A meeting of the Fiscal Risk Working Group of the Fiscal Discipline Council took place on 1 February 2016. The meeting was attended by representatives from the Ministry of Finance and the State Revenue Service. The first item on the agenda was a discussion on the micro-enterprise tax regime. The main point of discussion was the social, economic and fiscal impact of this tax regime. The Declaration of Fiscal Risks was also discussed during the meeting by broadening the definition of fiscal risks to gain a more complete understanding of the factors that can negatively affect the budget balance.
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After reviewing the outturn of the consolidated general budget for 2015, the Council concludes that the deficit has increased considerably, compared both to the plan and the forecast used when preparing the state budget for 2016.
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Announced procurement on communicatio services till 3 February 2016. More information available in Latvian here.
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According to Article 28 Part 7 of the Fiscal Discipline Law (FDL), the Fiscal Discipline Council shall prepare and submit to the Saeima and the Cabinet's attention of fiscal policy matters, where it finds them important to comply with the FDL terms.
According to the Regulation (EU) No 473/2013 of the European Parliament and of the Council of 21 May 2013 on common provisions for monitoring and assessing draft budgetary plans and ensuring the correction of excessive deficit of the Member States in the euro area (Regulation 473/2013 Article 5 Part 2(a) an independent body shall provide public assessment related to the occurrence of circumstances leading to the activation of the correction mechanism. FDL Article 11 stipulates the requirements regarding the correction mechanism in the national legislation.
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The question regarding the optimal level of government debt came into sharp focus after the most recent economic crisis (2008-2010). As a result of the crisis, average government debt levels, as a percentage of the gross domestic product (GDP), increased by 26 percentage points in the European Union and by 33 percentage points in Latvia. The Fiscal Discipline Law stipulates that a government debt level below 60% of GDP is one of the four fiscal rules that have to be observed when planning and executing the state budget. Due to the fact that the level of government debt, which was accumulated during the crisis, has yet to be reduced, the Council attempts to raise the question of government debt and assess how the risks of a new economic downturn could impact Latvia’s government debt.
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Fiscal Council observes increase of the fiscal risks and forecasts higher deficit level for 2016. The Council press release is available in Latvian.
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Fiscal Council chairman Jānis Platais shares his experience with Ukrainian colleagues on fiscal discipline issues.
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According to the Law on Fiscal Discipline Article 28 Part 7 the Fiscal Discipline Council shall prepare and submit to the Saeima and the Cabinet's attention of fiscal policy matters, where it finds them important to comply with the FDL terms.
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Mrs Elīna Lucka joins the Fiscal council in the position of economist. More information available in Latvian.
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Announced procurement on expert evaluation about the macroeconomics indicators' forecasting and output gap assessment. More information available in Latvian here.
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Fiscal Council: unused options – tax increase for property and capital growth. Interview with the Fiscal Council chairman Jānis Platais. More information available in Latvian at lsm.lv portal.
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In the meeting held on 11 November 2015, the Fiscal Risks working group discussed the cornerstones of the endorsement procedure and the contents of the Memorandum of Understanding between the Council and the Ministry of Finance. A brainstorm on potential research topics in the areas of fiscal policy and fiscal risks was performed. It was decided that the Secretariat should continue working on the Memorandum of Understanding and commence work on the tentatively confirmed research topics. The final decision on research topics will be made during the next Council meeting.
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In the meeting held on 28 October 2015, the GDP working group discussed the cornerstones of the endorsement procedure, drafting a Memorandum of Understanding between the Council and the Ministry of Finance and the endorsement timetable. Moreover, a brainstorm on potential research topics for the Council was performed. It was decided that the Secretariat should undertake drafting the Memorandum of Understanding, as well as start working on the tentatively confirmed research topics, but the final decision on research topics will be made during the next Council meeting.
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Fiscal discipline council is warning: budget surplus could be necessary by law. More information available in Latvian at delfi.lv homepage.
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Tomorrow, on 9 October everyone is kindly invited at Fiscal council. We would be happy to discuss budget discipline issues. To visit us please call 67083650 or write to info@fdp.gov.lv.
Latest information available here.
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Fiscal discipline council is looking for the expert in economics. More information available in Latvian.
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The Council press release is available in Latvian here.
On 25 September 2015 Fiscal council published its regular monitoring report. More information here.
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Fiscal council invites to the press conference on the monitoring report main results. The Council invitation is available in Latvian.
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The Council press release is available in Latvian.
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Fiscal council: this year budget gap might be twice its size than planned. More information available in Latvian at lsm.lv homepage.
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On 3 September 2015 Saeima approves Mr Andžs Ūbelis as the Fiscal council member. More information available in Latvian here.
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On 26 August 2015 the Fiscal risks working group reviewed the Fiscal risks declaration prepared by the Ministry of Finance to calculate the fiscal safety reserve volume.
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Price tender for the office room initial decoration repair. Application till 7 September 2015. More information available in Latvian here.
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The Council press release is available in Latvian.
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Fiscal council: since spring economic situation has been stabilising. More information available in Latvian at lsm.lv homepage.
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On 15 July the Fiscal Discipline Council expressed doubt as to the compliance with procedural norms and recommended the return of the draft law "State Emergency Medical Service's Employees Involved in the Provision of Emergency Medical Services Retirement Pension Law", approved by the Saeima on 8 July, for secondary review.
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Price tender for the press conference organisation. Application till 30 July 2015. More information available in Latvian here.
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According to Article 28, Part 7 of the Fiscal discipline law, the Council shall prepare and submit to the Saeima and the Cabinet's attention its opinion on fiscal policy matters if the Council finds them important for compliance with the terms stipulated in the Fiscal discipline law.
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On 9 July 2015 the GDP working group reviewed the most recent Ministry of Finance macroeconomic forecasts that will be used as the basis for drafting Latvia’s state budget for 2016 and the medium-term budget law. The working group agrees with the forecasts, supporting the opinion of the Ministry of Finance that the development of Latvia’s economy can be characterised as generally balanced. Nevertheless, just as in the interim report, the council continues to draw attention to the comparatively sharp constant growth in salaries that can negatively influence competitiveness.
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Interview with the Fiscal Council chairman Jānis Platais at Neatkarīgā rīta avīze with the journalist Arnis Kluinis available here in Latvian.
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Fiscal discipline council colleagues welcome and are proud for Emīls Ķīlis successfully passed PhD!
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On 16 June 2015 Riga hosted the first meeting of the Baltic independent fiscal institutions meeting, which was intended to discuss the European fiscal framework and the Baltic States fiscal discipline practice.
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Mr Emīls Ķīlis starts his work at the Fiscal council as the fiscal risks expert. More information available in Latvian.
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Published Fiscal council annual report 2014 (available in Latvian).
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Fiscal consolidation should be considered to ensure achieving government priorities in 2016 State budget. Fiscal discipline monitoring interim report (opinion) available in English here.
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Price tender for delivering the model for macroeconomics till 25 May 2015. More information here.
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Interview at LSM portal with Mr Jānis Platais: we will not manage without consolidation. Original article available in Latvian at LSM website.
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Mrs Elīna Veide starts her work at the Fiscal council as the macroeconomics expert. More information available in Latvian.
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On Mr Inesis Feiferis dismissal from the Council member position. More information available in Latvian.
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According to the Law on Fiscal Discipline Article 28 Part 7 the Fiscal Discipline Council shall prepare and submit to the Saeima and the Cabinet's attention of fiscal policy matters, where it finds them important to comply with the FDL terms.
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Fiscal council vision
A fiscally responsible Latvia, with a sustainable economic development, effective public services and social support.
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Fiscal Discipline Council Fiscal Risks Working Group on 31 March 2015 examined the summary of responses submitted by the authorities on the Government Action plan that has been adopted by the Cabinet of Ministers on 10 February 2015. The authorities have submitted the information on the Action plan activities' fiscal impacts. To summarise the submitted replies there is additional funding needed for 2016, estimates nearly 700 million euro (excluding the defence activities). The working group considers that the Government Action Plan has to be balanced with real funds available and, unfortunately, it most likely it will not be implemented unless the necessary funding is found for each of activity.
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Fiscal discipline council is looking for the expert in macroeconomics. More information available in Latvian.
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Presentations on fiscal discipline monitoring report are available in Latvian.
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According to the Law on Fiscal Discipline Article 28 Part 7 the Fiscal Discipline Council shall prepare and submit to the Saeima and the Cabinet's attention of fiscal policy matters, where it finds them important to comply with the FDL terms.
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On 11 February 2015 the GDP working group of the Fiscal Discipline Council took note of the presentation of the Ministry of Finance on the macroeconomic situation and forecasts for the 2015-2018 Stability programme. The working group finds the forecasts reasonable; simultaneously indicating numerous downside risks that might impact economic growth and thus the budget execution. Similarly to the recommendation of Fiscal discipline monitoring report of 2014, the Council wants to reiterate that the government needs to work on a strategy for revenue or expenditures measures in case tax collection projections would not be fully met. The GDP working group also appreciates the information from the Ministry of Finance on the issues of tax policy and municipalities.
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The Council press release is available in Latvian.
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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. Council secretary has two "shadows" this year - Elza Auguste and Aleksandrs Pētersons
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The Council press release is available in Latvian.
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The Council press release is available in Latvian.
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Latvia's biggest concern this year could lead to rather than the growth rate, but the rate of inflation, analyses Fiscal Discipline Council Chairman Jānis Platais. And not the fact that inflation might be too high, it may be too low.
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In November 2014 Fiscal risks working group in collaboration with external consultants performed a research to assess fiscal risks associated with possible state social insurance special budget expenditure for state pension and social benefit costs exceeding annual budget appropriations. Basing on research results (research performed by SIA RVJ, Elīna Veide), Fiscal discipline council evaluated the necessary Fiscal safety reserve for 2017 in the amount of 0,115% of GDP or 32.8 million euros.
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The Council press release is available in Latvian.
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The Council press release is available in Latvian. Addendum to the Monitoring report in English available here.
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The Council press release is available in Latvian. Monitoring report in English available here.
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The Council information is available in Latvian.
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The interview with the Chairman of the Council Mr Janis Platais is available in Latvian at tvnet.lv.
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The Council press release is available in Latvian.
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The Council press release is available in Latvian.
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