LATVIA – Budget
Next year 2023 will also begin in Latvia with a technical or temporary budget, while proposals for policy changes and new measures will be made by the new government.
The Budget and Financial Management Act provides that in an election year, the draft State Budget Act (the budget package) must be submitted to the Saeima no later than four months after the newly elected Saeima has expressed its confidence in the Cabinet of Ministers.
If the annual state budget act has not entered into force by the beginning of the fiscal year, an interim or technical budget is adopted which provides for the implementation of the existing policy without changing it. The interim budget does not provide for policy changes, new initiatives and new solutions.
The most recent technical or provisional state budget was prepared for 2019, taking into account the improved legal and regulatory framework for technical budget preparation, which linked the principles of provisional budgeting to the medium-term budgetary framework. Thus, the continuation and execution of public administration functions and initiated budgetary policies was ensured at a permanent level in accordance with the current regulations until the annual State Budget Act came into force.
If the annual state budget act has not entered into force at the beginning of the financial year, the Minister of Finance approves state budget expenditure and the limits on loans and borrowings necessary for the functioning of the state, provided that several conditions are met.
The basis for each ministry’s expenditure is the amount of expenditure of the respective ministry approved in the medium-term budget framework law for the respective year. It is regulated to ensure the fulfilment of international obligations, the payment of interest on public debt, the implementation of projects co-financed by foreign financial aid (including European Union funds), the provision of paid services by public institutions, and as the implementation of payments whose costs depend on changes in the number of recipients of services (for example: allowances, pensions).
It should be noted that the financing of activities started in the previous financial year continues, but the services (payment orders) not provided in the previous financial year are not paid, and investments not realised in the previous financial year are not made. year. Existing regulations in the area of pensions, benefits and compensation must be enforced, and such mandatory payments must be made as expenditure for the performance of public debt obligations in accordance with the provisions of existing treaties. and state contributions to the EU budget.
At the same time, the implementation of budget policies and conditions stipulated in the state budget law of the previous economic year continues unchanged, except for urgent measures that are expected to end in 2022. The distribution of earmarked grants and non-repayable financing, borrowing limits and guarantees are approved in order to ensure that local authorities have the stable financing needed to perform their functions. Thus, their use will be ensured for the implementation of projects co-financed by the EU and other foreign financial aid.
The implementation of a number of statutory instruments ensures a technical wage budget starting from 1 January 2023 (amendments to the Labour Act, which set the minimum monthly wage at a minimum of EUR 620 for normal working hours starting from 1 January 2023, amendments to the Act on Remuneration of Officials and Employees of State and Local Authorities on 16.11.2021 and a reform of the pay law).
