Latvia’s audit office submits proposals to cut state spending

Latvia’s State Audit Office has submitted proposals to help reduce government spending for the first time, as the Finance Ministry reviews possible cuts but has yet to decide on the most significant reductions, LSM reported.

The ministry has assessed hundreds of savings measures. Finance Minister Māris Kučinskis said in an interview with Panorāma that politicians would have to make the difficult decisions. The audit office said opportunities to save millions of euros had been known for years.

Latvia is expected to need almost 118 million euros in additional funds in next year’s state budget, according to the Finance Ministry’s latest calculations. That figure does not include nearly 426 million euros needed to carry out previously approved decisions that have no allocated funding.

The state is also forecast to pay about 681 million euros in interest on its debt next year. Higher defence spending and the growing cost of pensions are adding pressure, while further risks could come from airBaltic’s financial problems, state loans and guarantees, and the energy sector.

Latvian central bank governor Mārtiņš Kazāks said public finances were not yet in a critical position, but should be put in order before a crisis. He pointed to the rapid rise in Latvia’s public debt during the 2008 financial crisis and said managing existing state resources more effectively would be important as budget needs grow.