2023 in Latvia will commence with a technical or temporary budget. Proposals for political changes and new measures will be suggested by the new government, as informed by representatives of the Ministry of Finance.
The Law on Budget and Financial Management dictates that during the Saeima election year the draft for the state budget is to be submitted to the parliament no later than four months after the newly-elected Saeima approved the new Cabinet of Ministers.
If no new state budget project comes into force at the start of a new year, the government is to approve a temporary or technical budget plan that provides for maintaining the existing policy without changes, as explained by representatives of the Ministry of Finance.
The temporary budget does not provide changes to the ongoing policy, new initiatives or new solutions.
The next year – 2023 – will start in Latvia with a technical or temporary budget. Proposals for political changes and new proposals will be submitted by the new government.
The last time Latvia had to live with a technical budget was 2019. Representatives of the Ministry of Finance explain that this form of budget allows for maintaining functions of the state administration and continuing the policy initiated by the previous budget in accordance with existing regulations until a proper budget is approved.
If a law regarding the annual budget does not come into force at the start of a new year, the minister of finance is to approve state expenditures necessary to ensure uninterrupted functioning of the state, as well as lending and borrowing limits with respect of multiple conditions.
Each ministry’s expenditures are based on amount of expenditure approved in the medium-term budgetary framework law for the relevant year for the relevant ministry. Accounts are corrected to ensure compliance with international commitments, state debt interest payments, foreign financial aid, including EU funds, co-financed projects, paid services provided by budget institutions, as well as transactions in which expenditures depend on changes to the number of recipients of the service, such as pensions and benefits.
Ministry of Finance stresses that financing of the previous year’s activities will continue. However, services that were not provided in the previous year will not be financed.
Investments that were not performed in the previous economic year will not be implemented.
It is necessary to ensure compliance with regulations in the payment of pensions, benefits and remunerations, as well as ensure mandatory payments necessary to service the state debt are performed in accordance with existing rules.
At the same time, the previous budget’s policy and conditions are to be complied with and completed in accordance with established terms and conditions, except for activities scheduled to end in 2022.
In order to ensure local governments are provided with appropriate funding, the Ministry of Finance will approve limits on grants, funding, loans and guarantees.
The ministry stresses that Latvia’s economy needed to recover from Covid-19 crisis. This meant providing considerable state support to businesses impacted by pandemic and epidemiological restrictions, as well as paying compensation to residents who lost income due to the pandemic. This helped the economy adapt to the crisis. But then came the Russian-Ukrainian war.
To address the crisis the government passed legislation and implemented several measures to help provide support to companies impacted by the war, the least protected groups of society, Ukrainian refugees, as well as implement other support measures to help the economy recover and ensure growth.
Once all the necessary estimates and corrections are added, the ministry will prepare the minister’s decree regarding the temporary budget plan.