Fiscal council opinion regarding the amendments to the Law on Budget and finance management 3 December 2018
According to Part 7, Section 28 of the Fiscal discipline law, the Fiscal discipline council (hereafter – 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.
The Saeima has started to consider amendments to the Law on Budget and Finance Management (hereinafter – LBFM), focusing mainly on mandates in connection with the interim State budget, in circumstances where no new state budget has been adopted before the start of the financial year.
Essential proposal the LBFM draft law abolishes the current limit allowing authorisations to make expenditure one-twelfth of the previous year's national budget appropriations per month. The new norm provides for the possibility of assigning mandates to the ministries and central government authorities within the limits of the medium-term budgetary framework for the relevant year. The Council agrees with this amendment, given that the role of the medium-term budgetary framework in the fiscal governance of Latvia will be strengthened.
However, the Council notes the risk that, in the absence of a strictly defined mandate for the expenditure ceilings, it is possible to continue to raise expenditure beyond the maximum amount provided for in the medium-term budgetary framework. At the moment, the draft law does not establish a control mechanism for the implementation and execution of the interim budget. Accordingly, the Council proposes to supplement the LBFM draft law with the following provisions:
To add Article 15 (2) with a new subparagraph in the following wording:
To add Article 15 with a new paragraph in the following wording:
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.