To receive a loan from the State Treasury to stabilise the city’s finances, Rezekne will amend its budget once more.
Chairman of Rezekne City Council Aleksejs Stecs and municipal budget planning specialists from the Ministry of Finance have met with Permanent Commission for the Review of Local Government Financial Stabilization Applications and the Coordination of Financial Stabilization Projects to discuss the conditions Rezekne municipality will need to fulfil in order to receive a stabilisation loan – EUR 4.03 million.
The meeting mainly focused on topics related to Rezekne municipality’s budget for 2024.
Representatives of the committee also agreed, among other things, that shortening work weeks to save funds is not the best idea,
and this situation could potentially negatively impact the municipal administration’s ability to perform its functions. This could also lead to the municipal administration losing workers.
Specialists of Rezekne City Council also informed representatives of the committee of the Ministry of Finance about the measures they performed to centralise the city council’s accounting and financial systems to improve the budget and finance management process, as well as to ensure better transparency.
On the 22nd of March it was decided to form a new institution Economic and Financial Administration with a Centralised Accounting Office and Budget and Finances Office. The municipality’s specialists also developed a schedule and set provisional deadlines for the completion of the municipality’s finances and budget management centralisation efforts. The transition period is set to continue until the 1st of January 2026.
The municipality performed another condition in February, when it moved all of its accounts to the State Treasury.
The full package of documents requested by the Permanent Commission for the Review of Local Government Financial Stabilization Applications and the Coordination of Financial Stabilization Projects must be prepared by the 29th April in order to re-initiate the issue of securing a loan in the Cabinet of Ministers for the fulfilment of existing financial obligations to Rezekne.
The Ministry of Finance explained to LETA that Rezekne’s municipality planned to exceed the plan of PIT by nearly EUR 410 000 as its main measure to help balance costs in the budget for 2024. This amount was planned to be diverted towards the possible early repayment of the loan.
Also, the commission’s instruction on the planning of income from the lease/sale of real estate in accordance with the actual situation has not been taken into account already in 2023 in order to prevent possible financial risks and the municipality would not assume liabilities without real financial coverage. The Ministry of Finance emphasizes that the revenue of Rezekne municipality in 2023 from the lease and sale of real estate was fulfilled only in the amount of 39% of what was planned.
The committee agreed with Rezekne City Council that it will submit by the 29th of April budget amendments to ensure approval of the balanced budget for 2024. The city council is also required to approve the medium-term budget outlook for 2025-2026 by the same date.
Once this is done, the Ministry of Finance will submit to the government the proposal for the provision of a stabilisation loan to Rezekne. The ministry reminds that Rezekne municipality is the only one in Latvia that has approved this year’s budget without meeting deadlines.
Also read: Ministry of Finance to make decisions on loans for Rēzekne based on report from VARAM
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