On Monday, the 7th of August, Latvian Minister of Finance Arvils Ašeradens invited the State Audit (VK) to “consider the possibility of performing an emergency audit in Rezekne municipality so that it is possible to acquire comprehensive information to be used to fix the situation”.
On Monday the Minister of Environment Protection and Regional Development Māris Sprindžuks signed the order that has his institution perform an emergency audit in this municipality. The minister believes the source of financial troubles for Rezekne County Council lies in their ill-considered decisions on the construction of a spa center in the city.
It was reported on Monday that Rezekne mayor Aleksandrs Bartaševičs left for the Ministry of Finance to defend his case. Last week he mentioned at a meeting of Rezekne council that the root of the problem lies in the increase on loan repayments, as well as increased electricity and heating tariffs.
The opposition in Rezekne County Council asked Sprindžuks to assess the city’s financial situation and suspend the chairman for the duration of the investigation.
Ašeradens said he has reached out to VK because the Ministry of Finance has found multiple risks to Rezekne municipality’s financial situation.
Among them: 1) the municipality has high creditor liabilities, and there are projects implemented now that include significant co-financing from the municipal budget, but there is no confidence that all of the municipality’s taken liabilities are included in this year’s budget; 2) the municipality has multiple payments halted in projects co-financed by the European Union; 3) according to information from the municipality’s quarterly accounts as of the 30th of June
the municipality has missed payments worth more than EUR 1 million.
Additionally, the municipality continues planning new projects or additional expenses for existing projects despite high loan liabilities.
On top of that, the ministry received information from Rezekne County Council’s opposition about the deficit that has formed in the municipality’s budget, which puts the local government’s functions at risk. Rezekne County Council was asked to provide a plan to resolve the financial situation, assess the financial situation and review budget expenditures and look for ways to optimise expenses. The deadline was the 22nd of June. The municipality did request a term extension until August. The requested information still has not been received.
For the Ministry of Finance to actively follow Rezekne’s financial situation, the municipality is asked to submit information about missed payments to the ministry by the 23rd of every month.
Also read: Latvian minister allows Rezekne municipality could be at risk of financial stabilisation procedure