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The Council held a regular meeting on Wednesday to discuss the proposed amendments to the Budget and Financial Management Act and discussed the prospects for fiscal developments.
The Saeima Committee on Budget and Finance has started to consider a proposal to amend the budget and financial management law, mainly because of the temporary budget regulation, until the new Saeima approves the new government. , which will have to decide on the establishment of the 2019 budget. The proposal examined by the Saeima commission proposes to lift the limitation in the provisional budget, within one month, to the authorization of expenditure not to not exceeding 1/12 of approved expenditures in the previous year's budget.
The Budget Disciplinary Board proposes to propose, in the preparation of the interim budget, the maximum budgetary expenditure for 2019, as approved by the medium-term budget framework law for 2018, 2019 and 2020. Any increase Expenditure on pensions, benefits and wages not included in the medium-term law must be fully offset by the reduction in other government budget expenditures.
The Council notes that the government has incurred high expenditure commitments, which do not have sufficient resources to cover national budgets, which could lead to difficult choices for the establishment of the 2019 budget, as well as problems for political parties in the implementation of their priorities in the process of building the government. It is particularly problematic to have a deficit budget in a context of rapid economic development.
There is a very high risk that, without adequate control over the level of budget spending, it is necessary to reduce budget expenditure or increase the tax burden to compensate for imbalances, the council warns.
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