Valkas council votes to begin financial stabilisation

Valkas municipality council has unanimously voted to begin a financial stabilisation process, LSM reported. The decision was made without debate.

Mayor Vents Armands Krauklis said the municipality had discussed its budget situation and possible solutions with the State Audit Office and the Finance Ministry. Loan repayments have so far been deferred one month at a time. If another deferral is not granted, the municipality will be unable to carry out its day-to-day duties, he said.

Krauklis said the Finance Ministry views the stabilisation process as a prerequisite for including deferred payments in a stabilisation loan. He said the move would not improve the municipality’s situation, but that it had no other option. He added that it was unclear when a new government would be formed or what position it would take on Valkas.

Valkas municipality’s financial problems have been discussed for several years. In May, the government allowed it to defer some loan repayments to coming years and instructed it to submit a revised budget and a financial recovery plan. The government also asked the State Audit Office to carry out an in-depth audit of the municipality’s model for providing and financing heating and water services.

In early September, the Finance Ministry told council members that Valkas could not balance its 2026 budget cash flow sufficiently to meet all its creditor obligations. On September 24, the council voted against the ministry’s proposal to start the stabilisation process.