RIGA - The government on June 3 unanimously supported the need to strengthen the country’s fiscal discipline standards by approving middle term budget conditions, tightly restricting an increase to the national debt and the possibility for budget amendments, reports the Latvian Institute. Finance Minister Einars Repse said that “Fiscal discipline provisions must be secured in legislation, even by amending the Constitution if necessary in order to exclude the possibility of softening fiscal discipline norms or the multi-annual framework when passing annual budgets by the Saeima.
The Finance Ministry considers that securing fiscal discipline standards in legislation will ensure stability for financial markets and investors. It will show that Latvia is planning revenues and expenditures according to economic growth ratios, providing for clear and predictable development planning and creating a responsible and sustainable fiscal policy.
The government decided to include fiscal restraints in the Satversme (Constitution) and Rules of Procedure of the Saeima, as well as to draft a new law on fiscal discipline. The law is to provide for a consolidated state budget, including for municipalities, and to establish a numeric future indicator for the budget balance; among other things, the law will state that national debt must not exceed 60 percent of GDP, and will prohibit budget amendments allowing above-plan revenue distribution, except for the repayment of debt or channelling funds into a long-term stabilization reserve.