The fiscal security reserve is included in the Government’s budget plan 2 August 2016
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.
"The Fiscal security reserve is an insurance policy that must be purchased in order to amortise the impact of fiscal risks that have been identified and included in the government’s Statement of fiscal risks, mainly to insure against unforeseen legal and financial sanctions,” says Jānis Platais, the Chairman of the Fiscal discipline council. “In previous years, the requirement of the Fiscal discipline law to establish a fiscal security reserve was not observed, which is why the decision to establish it for next year and subsequent years is commendable,” notes Jānis Platais, expressing his delight at the Government’s decision.
The fiscal security reserve is intended to counter sudden shocks to the general government balance and to improve it if expenditure levels are higher than expected or revenues fall short of the target. The Fiscal security reserve is formed on the basis of the analysis included on the Statement of fiscal risks. The Fiscal discipline law stipulates that the fiscal security reserve should be at least 0.1% of GDP.