RIGA - The Finance Ministry is currently analyzing information provided by Rezekne City Council to possibly commence a financial stabilization process at the municipality, as the ministry informed LETA.
The Finance Ministry explains that Rezekne City Council was on September 11 instructed to submit an updated application for financial stabilization process so that the ministry could assess full information and reasons for financial stabilization process. Rezekne municipality's report was received on September 19 and is currently being looked into.
In the report, Rezekne City Council states that the city's 2023 budget does not foresee the necessary funding to cover all obligations of the municipality, Aleksis Jarockis, head of the Finance Ministry's Communications Department, told LETA. In the ministry's opinion, this is a gross violation of financial management principles as well as of the regulatory framework.
Rezekne City Council is currently short of EUR 2.1 million to cover all of its obligations.
The Finance Ministry cannot rely on financial information provided by Rezekne City Council alone, so findings of an audit carried out by the State Audit Office will be important, said Jarockis.
He also explained that, according to this year's state budget law, Rezekne municipality cannot borrow more money as it is already unable to honor its obligations to creditors. As of August 31, the municipality's arrears stood at EUR 1.7 million, an increase of EUR 800,000 from July 31.
"In a situation where the municipal budget is amended on September 21 and its deficit is increased, this is considered blatant irresponsibility on the part of the councilors," said Jarockis.
At a meeting on Thursday, September 21, Rezekne City Council supported increasing Rezekne budget deficit: the revenue projection was raised by almost EUR 1 million to EUR 48.36 million, while the spending projection was upped by EUR 2.14 million to EUR 58.7 million.