The Council will commence work on a fiscal sustainability report in 2017 7 December 2016
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.
The first item of the agenda was a discussion with representatives of the Fiscal policy department regarding budget outcome indicators for 2013-2015. The results for this period are in accordance with the norms stipulated in the Fiscal discipline law, but the frequency of data revisions and the uncertainties of Latvia’s economic cycle should be born in mind. The Council will issue a more detailed opinion later this week.
After consulting with experts from the Tax analysis department, the Council expressed a positive opinion of the quality of revenue forecasts, which highlight the need for a conservative approach.
In the discussion regarding the irregularity report issued on 11 November 2016 concerning the reallocation of funds from the budget sub-programme “Payments to the budget of the European Community”, and the reply from the Ministry of Finance, both sides agreed that further discussions are required in order to clarify the legal framework, as this bears directly on an item included in the Statement of fiscal risks.
In addition, the Council discussed the plan to commence work on a fiscal sustainability report in 2017, following international practices and addressing issues explored in other countries’ fiscal sustainability reports. In view of Latvia’s demographic situation and current trends, it is very important that issues pertaining to fiscal sustainability are considered and analysed. Will we be able to continue servicing our public debt, without reducing the range of public services? We have to start thinking about this, notes Council member Morten Hansen.
Upon concluding the meeting, the Council noted the significant progress achieved during the preparation of the state budget; specifically – the inclusion of the fiscal safety reserve in the Medium-term budget framework 2017-2019.