Latvian government pledges responsible spending next year

RIGA - Latvian Prime Minister Ivars Godmanis has said that financial discipline will have to change significantly next year, and that ministries will only be able to spend money that is in the budget.

From January 1 next year there is a regime set that only the money thathas come to the budget can be spent. If revenues are below the target, thebudget will have to be cut.

He said that ministers will monitor revenues each week and from early nextyear the ministries will have to save up 10 percent of allocated funding.

The Latvian government at a closed meeting earlier this week agreed that reservesshould be built from budgets of all ministries at the beginning of nextyear. Latvian Finance Minister Atis Slakteris told the press that thismeant than in January and possibly during the entire first quarter of 2009the ministries would be able to spend only 90 percent of the fundingallocated to them.

He said that such "safety pillow" was necessary, if thebudget revenues fell short of the target at the beginning of the nextyear.

The finance minister said that it was also decided to set up a supervisorycommittee for salaries and a supervisory committee for fiscal disciplinewhich would monitor the budget revenues and expenditures on a weeklybasis.

Revenues to the 2009 budget are planned at 4.407 billion lats (EUR 6.27 b)and expenditure at 5.146 billion lats, cutting the revenue targets by 16.3percent or 912 million lats and expenditure by 2.1 percent or 419 millionlats as compared to 2008. The budget deficit next year is planned at 739.4million lats or 4.9 percent of GDP.