THE FISCAL DISCIPLINE COUNCIL FINDS NON-COMPLIANCE IN THE DISTRIBUTION OF PUBLIC BUDGET EXPENDITURE  1 November 2019

On October 29, 2019, the Cabinet of Ministers reviewed and approved the Informative Report “On state basic budget basic functions expenditure potential savings and possible redistribution for the state budget for 2019”. A review of unused funds in various programs identified 31.2 million euros, which could be spent on other programs.

Unused funds are also identified in programs to which, in accordance with Article 5 of the Fiscal Discipline Act, expenditure adjustment is applied to fiscal planning, so that deviations from the necessary funds in the course of budget implementation do not affect the execution of these programs. These include funds for various groups of beneficiaries of social benefits, as well as funds for debt management, contributions to the European Union budget or international cooperation. Of the total redistributed funds in amount of 31.2 million euros,  the Fiscal Discipline Council finds a breach of the Fiscal Discipline Law in amount of  8.1 million euros in the 2019 budget.  7.6 million of this amount was not spent because the number of recipients and amount of social benefits or pensions was below target.

By redistributing expenditure from the programs mentioned Article 5(1) of the Law on Fiscal Discipline, the maximum amount of public expenditure is reduced.

In addition, the Council refers to its previous Surveillance reports, which noted that the non-adoption of the Medium-Term Budgetary Law for 2019-2021 continues to cause inconsistencies in the state budget planning and execution process. The Budget Law for 2019 was approved with an amount of expenditure that exceeded ceiling on expenditure for 2019 set by the Medium-Term Budget Framework Law 2018-2020 by 68 million euros.

The full text of the non-compliance report is available on the Fiscal Discipline Board's website: https://fiscalcouncil.lv/files/uploaded/NZ291019vfinalENG.pdf