On Budget and Financial Management

Transcription

1 Disclaimer: The English language text below is provided by the State Language Centre for information only; it confers no rights and imposes no obligations separate from those conferred or imposed by the legislation formally adopted and published. Only the latter is authentic. The original Latvian text uses masculine pronouns in the singular. The State Language Centre uses the principle of gender-neutral language in its English translations. In addition, gender-specific Latvian nouns have been translated as gender-neutral terms, e.g. chairperson. Text consolidated by Valsts valodas centrs (State Language Centre) with amending laws of: 25 November 1996; 1 October 1997; 1 April 1998; 25 November 1999; 23 November 2000; 31 October 2002; 19 December 2002; 30 October 2003; 20 December 2004; 20 October 2005; 19 December 2006; 8 November 2007; 14 November 2008; 28 May 2009; 12 June 2009; 10 September 2009; 1 December If a whole or part of a section has been amended, the date of the amending law appears in square brackets at the end of the section. If a whole section, paragraph or clause has been deleted, the date of the deletion appears in square brackets beside the deleted section, paragraph or clause. 1 The Parliament of the Republic of Latvia The Saeima 1 has adopted and the President has proclaimed the following Law: On Budget and Financial Management This Law determines the procedures for the formulation, approval and implementation of the State budget and local government budgets, and responsibilities in the budget process. Financial management within the meaning of this Law shall apply to budgetary funds of the State budget and local government budgets. The provisions of this Law apply to the financial activities of merchants in cases where they have been allocated funds from the State budget or local government budgets, a share of capital has been invested by the State or local governments in them, or it is specially so determined by law or regulations of the Cabinet. The provisions of this Law also apply to State and local government agencies and to public foundations. [1 April 1998; 25 November 1999; 23 November 2000; 20 December 2004] I. Terms Used in this Law Loans budgetary funds transferred to legal persons with which such persons have the right to act, and which they have an obligation to repay, as well as loans for fulfilling assumed obligations, if the taker of the loan has remained in debt to the State or a local government. Repayment of loans loans repaid to the State or a local government. Appropriation - authorisation granted by a budget law in a fixed amount which allows the Treasury to assign and make payments for particular purposes from the revenue of the State budget, or local government councils to make payments for local government purposes from Translation 2010 Valsts valodas centrs (State Language Centre)

2 local government budget revenue. Appropriation reserve a specified part in the annual State Budget Law, which the Cabinet allocates in conformity with the conditions included in the annual State Budget Law; Assignation authorisation to assume short-term liabilities or make payments for particular purposes from State budget funds, on the basis of an appropriation. Delay in assignation assignation of State budget funds for the next month in a partial amount without changing the total amount of assignation. Reduction of assignation a reduction in an assignation of State budget funds until the end of a financial year through change of financial plans for the relevant months. Foreign financial assistance financial assistance which is received from the European Union, foreign governments, international organisations or other providers of foreign assistance. Bodies financed from the budget budget institutions, derived public persons that are partially financed from State or local government budgets, all merchants, associations or foundations financed fully or partially directly from the State budget. Bodies non-financed from the budget direct State administrative institutions subordinated to a member of the Cabinet, which perform certain State administrative functions or tasks and the activities of which are fully, except the case specified in this Law, financed from the revenue thereof for the paid services provided and other own revenue, gifts, donations and foreign financial assistance. Budget institutions State or local government institutions, derived public persons that are fully financed from the State or local government budget, as well as local government agencies. Persons implementing the budget managers of bodies financed from the budget, who are authorised by an assignation to make budget expenditures or to enter into short-term liabilities, or also are entitled to enter into long-term liabilities with respect to the budget. Package of budget bills a package of bills which consists of a draft annual State Budget Law or a draft annual State budget amendment law, and bills which determine or amend the State budget. Budget programme a programme of such mutually connected measures or services as are oriented to a common objective, which is planned, implemented, recorded and controlled by bodies financed from the budget in accordance with this Law and regarding which implementation the persons implementing the budget are liable. The budget programme may be divided into subprograms. State central institution a State budget institution for which budgetary funds are directly provided for in the annual State Budget Law in accordance with appropriation procedures. Dividends revenue from the utilisation of State capital, not counting interest payments. Grants budgetary funds that are allocated to other budgets, merchants, associations and foundations and other institutions according to the procedures specified in regulatory enactments in order to ensure the performance of State or local government functions. Grants from general revenues funds which State budget authorities or local governments receive, with or without a designated (earmarked) purpose, from taxes, fees and other payments paid, in accordance with centralised procedures, into the revenues of the State budget. European Community own resources the resources specified in European Community legislation, which are intended to ensure the financing of the European Community budget. Translation 2010 Valsts valodas centrs (State Language Centre) 2

3 European Union policy instruments European Union structural funds, Cohesion funds, Common Agricultural Policy and other European Union financial resources, which the European Commission directs to a Member State for the implementation of its policies to achieve the specified goals of the Treaty on European Union. Financial accounts a calculation of the results of financial activities by a merchant financed directly from the State budget, which consists of a balance sheet, calculation of the results of economic activity, a report on changes in own capital, a report on the revaluation of long-term investments, a report on intangible investments and movement of fixed assets, and a report on and an explanation of long-term and short-term financial investments. Financial plan a breakdown of expenditures and financing for the covering of expenditures of resources of a body financed from the budget or a measure financed from the State budget that allows receipt of an assignation from the Treasury. Revenue taxes collected or received in accordance with tax laws, State and local government fees and other payments into budgets, as well as the revenue of budget institutions from services provided and charged for by them and other own revenue, revenue ear-marked for special purposes, net receipts from realisation of assets, interest payments received and dividends, foreign financial assistance, donations and monetary gifts or gifts in kind (accounted for monetarily), as well as revenue from received transfers. Investments investments the purpose of which is to promote the development of the national economy, increase the level of the welfare of society, improve infrastructure and the arrangement of the surrounding environment. Investment projects an aggregate of successive activities with a specified implementation schedule in which the acquisition or creation of material and immaterial value provided for in the measures, and for which the justification for the implementation organisational structure and the necessary resources for implementation of the investment project have been specified. Short-term liabilities a contract entered into to ensure the functions of the State or local government, including contracts for a service received, payment for which is to be made by the bodies financed from the budget within one financial year. Maximum permissible amount of State budget long-term liabilities an authorisation, granted to a ministry or other State central institution within the limits specified in the annual State Budget Law, to enter into contracts for ensuring the fulfilment of measures, projects of national importance or liabilities undertaken internationally that are paid in subsequent financial years. Expenditures all payments from a budget, except for repayment of principal amount of debts and payments that are settled in accordance with those financial transactions that are accounted in conformity with the classification of financing approved by the Cabinet. Consolidated general budget the total amount of the State basic budget, the State special budget, the local government basic budget, the local government special budget, the budgets of derived public persons that are partially financed from the State or local government budget and the budgets of the bodies non-financed from the budget from which transfers have been deducted. Paid services an aggregate of measures, which a State budget institution in the cases provided for by external regulatory enactments, performs for payment in order to ensure the observance of the needs of society. Earmarked grants State budget funds that are allocated to other budgets to provide financing for a specific purpose. Translation 2010 Valsts valodas centrs (State Language Centre) 3

4 Basic budget the part of the budget which is formed from general revenue, grants for specific purposes, revenue from paid services and other own revenue, transfers, foreign financial assistance, and expenditures intended to be covered from such revenue, as well as State budget loans and repayments of State budget loans. Constant appropriation [1 December 2009] Liabilities a contract entered into to ensure the functions of the State or local government, including contracts for a service received, payment for which is to be made by the bodies financed from the budget within one financial year or in subsequent financial years. Special budget the part of the budget formed of special purpose earmarked revenue, revenue from paid services and other own revenue, transfers, foreign financial assistance, donations and monetary gifts or gifts in kind (accounted for monetarily), as well as expenditures intended to be covered from such revenue or also loans from the State basic budget. Subsidies [19 December 2006] Net loan [19 December 2006] Merchants directly financed from the budget merchants, which in accordance with the appropriations specified by the annual State budget, receive financing from the State budget in conformity with approved financial plans or from State administration institutions as funding security for the implementation of concrete State administration tasks. Transfers transfers of specially earmarked budget funds in the annual State budget, which may be made within the scope of one level budget State basic budget, State special budget, local government basic budget, local government special budget or between various level budgets. The recipient of transfers may utilise the received transferred budget funds both for covering expenditures and for transferring further to other transfer recipients. State budget long-term liabilities contracts entered into for ensuring the fulfilment of State functions, measures of national significance, projects or liabilities undertaken internationally, including contracts regarding the services to be received, in accordance with the provisions of which a body financed from the budget shall settle payments in subsequent financial years. State investment programme [14 November 2008] National debt the total amount of liabilities expressed in monetary terms, as are covered from State budget funds. Medium term State budget planning a process in which accessible resources are specified for the medium term and the use of such resources is ensured in conformity with the priorities specified by government. Medium term a three-year period, which is formed by the financial year in which the State budget is planned and the subsequent two financial years. [25 November 1996; 1 October 1997; 1 April 1998; 25 November 1999; 23 November 2000; 31 October 2002; 30 October 2003; 20 December 2004; 20 October 2005; 19 December 2006; 8 November 2007; 14 November 2008; 1 December 2009] II. General Provisions Section 1. Budget and Its Purpose (1) A budget is a means for the implementation of State policy through financial methods. The budget is the foundation for government financial activities and management. (2) The purpose of a budget is to determine and substantiate the means required for the Translation 2010 Valsts valodas centrs (State Language Centre) 4

5 government, other State authorities and local governments to fulfil such State duties the financing of which is determined by legislative acts, ensuring that within the period for which such funds are provided expenditures are covered by corresponding revenue. In formulating budgets, the necessity of ensuring an overall economic balance shall be taken into account. Section 2. Financial management (1) Financial management shall encompass all administrative measures necessary for ensuring the budget formulation and implementation process, including control and responsibility measures. (2) The Cabinet shall ensure the formulation and implementation of the budget and determine the procedures for financial activities of local governments and bodies non-financed from the budget. (3) The Cabinet shall issue orders, instructions and recommendations for the detailed application of this Law. (4) [20 October 2005] (5) [8 November 2007] [23 November 2000; 31 October 2002; 20 December 2004; 20 October 2005; 8 November 2007; 1 December 2009] Section 3. Division of Budgets (1) Budgets are classified as the State budget and local government budgets. (2) The State budget and the local government budgets shall consist of a basic budget and a special budget. (3) A consolidated general budget shall be made for informational purposes. [1 April 1998; 1 December 2009] Section 4. Financial Year A financial year shall begin on 1 January and end on 31 December. Section 5. State Budget (1) All payments which in accordance with law or other regulatory enactment or a contract are to be included in the State budget revenues shall be State budgetary funds, which in accordance with an appropriation set out in an annual State Budget Law, may be appropriated for State purposes. (2) State budget funds are also payments for the utilisation of State capital, which are paid each year by State undertakings, as well as companies which a State capital share. The Cabinet shall determine the amount of and procedures according to which payments for the utilisation of State capital are made and included in the State budget. (3) Funds from the State budget may be allocated or received only pursuant to an appropriation provided for in an annual State Budget Law. (4) State budgetary expenditures shall consist of appropriations determined with respect to specific State needs, in accordance with an annual State Budget Law. (5) The difference between revenue and expenditures of a State budget is the State budget financial balance. The State budget has a financial surplus if the State budget financial balance is positive or State budget revenue exceeds expenditures. The State budget has a financial deficit if the State budget financial balance is negative or State budget expenditures exceed revenue. Translation 2010 Valsts valodas centrs (State Language Centre) 5

6 (6) Loans from the State budget are State budgetary funds which have been transferred to legal persons and create rights to deal with such and the obligation to return the loan received, and loans from the State budget for fulfilling assumed liabilities in accordance with issued State guarantees. (7) Repayments of loans from the State budget are made up of all the loans repaid. (8) [19 December 2006] (9) The Cabinet shall issue regulations regarding the approval of payment for service price lists of State direct administration institutions. (10) The Cabinet shall determine the procedures by which ministries and other State central institutions shall plan, implement, supervise and account for State budget programme (subprogramme) results and the indicators thereof, as well as provide reports regarding them. (11) The Cabinet shall determine the type, amount of payments and procedures for paid services provided by the courts. (12) The Cabinet shall determine the procedures by which income from the paid services provided by State budget institutions and the expenditures associated with the provision of such services are planned and accounted for. (13) The Cabinet shall determine the procedures by which the institution financed from the budget shall participate in the implementation of programmes financed from the European Union and international institutions in another country and plan and account the project financing. [25 November 1996; 1 April 1998; 25 November 1999; 23 November 2000; 31 October 2002; 20 December 2004; 20 October 2005; 19 December 2006; 8 November 2007; 12 June 2009] Section 6. Local Government Budgets (1) Local government budgets for each financial year shall include all the revenue collected or received by local governments (local government authorities) and borrowings, which shall be appropriated by local governments for local government purposes. Local government budgets shall have a revenue part, an expenditures part and financing part. (2) Funds provided for in a local government budget may be allocated, or received by local government authorities, in conformity with the purposes and in the amount provided for in a budget approved by the city council. (3) The distribution of revenue between the State budget and local government budgets, as well as the equalisation of State budget grants to be allocated to local governments and the equalisation of the economic opportunities in territories shall be specified in laws on which such revenue is based, in special laws or in an annual State Budget Law. (4) [23 November 2000] [23 November 2000; 31 October 2002] Section 6. 1 Budgets of Bodies Non-financed from the Budget (1) The revenue of bodies non-financed from the budget shall include the revenue from paid services provided by these bodies and other own revenue, gifts and donations, as well as foreign financial assistance. (2) If, in adopting a law or taking a Cabinet decision, an administrative task is specified for a body non-financed from the budget for the financing of which the revenue for the provided paid services or other own revenue is not intended, in accordance with the annual State Budget Law the body non-financed from the budget may receive a grant from general revenue for the provision of implementation of such task. Translation 2010 Valsts valodas centrs (State Language Centre) 6

7 (3) Bodies non-financed from the budget may participate in projects of the European Union policy instruments and in projects of other foreign financial assistance without receipt of the State budget co-financing. (4) Bodies non-financed from the budget may undertake long-term liabilities if such liabilities are co-ordinated with a ministry (a supervisory body). A performance deadline of long-term liabilities may not exceed 10 years and a maximum permissible amount of long-term liabilities for which a performance deadline has occurred in the relevant financial year may not exceed 20 per cent of the planned revenue for a current financial year of the body non-financed from the budget. (5) A surplus from funds of a current year of bodies non-financed from the budget may be used in the following year to finance expenditures. [1 December 2009] Section 7. Basic Budget (1) A basic budget shall be a part of the budget and included therein shall be: 1) all the State or local government revenue which is intended to cover expenditures, except revenue earmarked for special purposes, gifts and donations of special budget; 2) appropriations regarding all State and local government expenditures which are intended to be covered from the funds of the basic budget; and 3) local government budget borrowings and repayment of borrowings. (2) Loans from the State budget, repayment of loans from the State budget, expenditures for meeting liabilities regarding guarantees provided in the name of the State, as are to be covered from State budget funds, shall be applicable only to the basic budget unless otherwise provided for by law. [1 April 1998; 23 November 2000; 14 November 2008] Section 8. Special Budget (1) A special budget shall be a part of a budget that includes the following: 1) the covering of the State budget expenditures provided for in the Law from sources of revenue earmarked for special purposes; 2) donations or gifts received by a State, local government or budget institution with or without an indicated purpose; 3) borrowings from the State basic budget and repayment to the State basic budget; or 4) revenue of the local government special budget that is formed by the resources of the Latvian State Roads fund, revenue of the natural resources tax, revenue from privatisation, port fees, revenue from other sources of revenue earmarked for special purposes and expenditures related to them, borrowings and repayment thereof. (2) [23 November 2000]. (3) Transfers from a basic budget account to a special budget account shall only be permitted pursuant to an appropriation. [25 November 1996; 1 April 1998; 23 November 2000; 19 December 2006; 14 November 2008] Section 8. 1 Long-term Stabilisation Reserve Translation 2010 Valsts valodas centrs (State Language Centre) 7

8 (1) The long-term stabilisation reserve is a fiscal policy instrument the aim of which is to: 1) reduce general economic risks; 2) [14 November 2008] 3) avoid socio-economic crises or to reduce the impact thereof; and 4) ensure the availability of financial resources in the case of emergency situations. (2) The procedures for the establishment and utilisation of the long-term stabilisation reserve shall be determined by the Long-term Stabilisation Reserve Law. (3) [14 November 2008] [8 November 2007; 14 November 2008] Section 9. Appropriations (1) State budget appropriations shall be allocated in accordance with the annual State Budget Law. Local government budgetary funds shall be appropriated in accordance with the procedures prescribed in this Law and other laws. (2) Any amendments that refer to the amount, purposes or terms of appropriations shall be made in accordance with the provisions of this Law. (3) A special budget is an appropriation permitting only such expenditure as does not exceed the amount of actual revenue of the financial year and the surplus of funds at the beginning of the financial year and borrowings from the State basic budget. (4) All appropriations shall cease to be in effect at the end of the financial year. (5) [1 December 2009] (6) [1 December 2009] (7) [1 December 2009] (8) [1 December 2009] (9) [1 December 2009] (10) [1 December 2009] (11) [1 December 2009] (12) [1 December 2009] (13) The Minister for Finance has the right to perform the following reallocations of the appropriations in accordance with the procedures specified by the Cabinet informing the Saeima thereof: 1) for a ministry or other central State institution within the framework of the appropriation specified in the annual State Budget Law among programmes, sub-programmes and expenditure codes in conformity with economic categories. The annual State Budget Law includes the conditions which the Minister for Finance shall observe in deciding regarding reallocation of the appropriation; 2) from the planned appropriation in a separate budget programme for undivided financing for implementation of European Union policy instruments and other foreign financial assistance projects and measures which is not being planned in a ministry or other central State institution budget to ministries and other central State institutions, as well as appropriations from ministries and other central State institutions for implementation of European Union policy instruments and other foreign financial assistance projects and measure to a separate budget programme in which appropriations for undivided financing for implementation of European Union policy instruments and other foreign financial assistance projects and measures are planned. (14) The Minister for Finance has the right to increase the appropriation specified in the annual Translation 2010 Valsts valodas centrs (State Language Centre) 8

9 State Budget Law, if the Budget and Finance (Taxes) Commission of the Saeima has examined it and has not objected to the increase in the appropriation within five days from receipt of the relevant information only for the following purposes : 1) the utilisation of revenue of State budget institutions from paid services and other own revenue, foreign financial assistance funds, transfers made during the implementation process of the annual State budget, as well as the surplus of revenue calculated in accordance with the procedures specified in Section 27 of this Law, as remains at the beginning of a financial year; 2) increasing the own resources of the European Community and accounting with the European Union; 3) implementation of international court and Constitutional Court judgments; 4) cancellation of national debt obligations; 5) implementation of European Union policy instruments and projects and measures of other foreign financial assistance; 6) covering of social insurance special budget expenditures specified in regulatory enactments; and 7) payment of the guaranteed reimbursements provided for in the Law for ensuring resources missing in the Deposit Guarantee Fund. (15) The Minister for Finance has the right to reallocate appropriations among ministries and other central State institutions including in cases of function reallocation or structural reforms, if the Cabinet decision has been taken and the Saeima has agreed with such reallocation in accordance with the procedures specified in regulatory enactments. [25 November 1996; 1 April 1998; 25 November 1999; 23 November 2000; 31 October 2002; 30 October 2003; 20 December 2004; 19 December 2006; 8 November 2007; 14 November 2008; 12 June 2009;1 December 2009] Section 9. 1 Appropriation Reserve (1) The annual State Budget Law shall determine the appropriation reserve, which ministries, other State central institutions and local government shall request and utilise according to the procedures specified by the Cabinet. (2) The annual State Budget Law shall determine the main provisions for utilisation of the appropriation reserve, and such reserve shall be provided for as a separate State basic budget programme. (3) [1 December 2009] (4) Within the scope of the appropriation reserve, the Minister for Finance shall allocate to the ministries, other State central institutions and local governments appropriations, but not in a greater amount than the unused grants from general revenue for the end of the previous year. (5) The Minister for Finance shall approve the allocation of the appropriation reserve of the current year for ministries, other State central institutions and local governments by programmes, sub-programmes and expenditure economic classification codes. (6) ) If the ministry or other State central institution does not agree with the decision of the Minister for Finance regarding the amount of reallocation of appropriation reserve among programmes, sub-programmes and expenditure codes in conformity with economic categories, then, after receipt of motivated objections, the Minister for Finance shall, within five working days, come to an agreement with the relevant ministry. If it is not possible to come to an agreement, the issue shall be passed on for consideration to the Cabinet. [19 December 2006; 8 November 2007; 12 June 2009; 1 December 2009] Translation 2010 Valsts valodas centrs (State Language Centre) 9

10 Section 10. Amendments to Budgetary Revenue and Expenditures (1) In the decisions of the Saeima, the adoption of which relates to expenditures not provided for by the budget, provision shall also be made, in accordance with Article 66, Paragraph two of the Constitution, for funds by which such expenditures shall be covered. In cases provided for by law, the Minister for Finance shall submit an opinion in regard to submitted draft laws not later than within a two-week period from the date of receipt of the relevant draft law. (2) If, after a State Budget Law comes into force, the Saeima adopts laws or the Cabinet adopts decisions which in the current financial year cause an increase in local government expenditures or a decrease in their revenue, there shall be set out in such laws or decisions what State budgetary funds the increase in the local government expenditures or the decrease in their revenue shall be covered from. (3) If, after approval of the State budget, the Saeima adopts laws or the Cabinet adopts decisions which allow the budgetary expenditures of local governments to be decreased or their revenue to be increased, such surplus of funds may, in accordance with the procedures regarding State budget appropriations, be directed to the needs of the State or local governments. (4) If local governments, exceeding their competence, take decisions as a result of which the revenue of the State budget decreases or expenditures increase, the amounts required to cover losses shall be paid from local government budgets into the State budget. [25 November 1996; 1 October 1997] Section 11. Classification In order to ensure control of the utilisation of budgetary funds and provide an opportunity to perform necessary analysis in conformity with the administrative, functional and economic categories, the cabinet shall determine: 1) budgetary (State budget and local government budgets) revenue, expenditures and financing classifications; 2) national debt classification; and 3) general government debt and institutional sector classifications. [25 November 1996; 1 April 1998; 31 October 2002; 20 December 2004] Section 12. Funds for Unforeseen Events (1) Funds for unforeseen events and for particularly significant measures at a national level shall be determined in a separate budget programme Funds for Unforeseen Events of the annual State Budget Law, which is planned separately from the budgets of ministries or other central State institutions. (2) The procedures by which ministries, other State central institutions and local governments prepare a request of the funds provided for in a separate budget programme Funds for Unforeseen Events, the procedures for review of the request, criteria for the granting of funds, utilisation, accounting, control of such funds and the procedures for provision of reports, as well as regarding special conditions for local governments shall be regulated by the Cabinet. (3) The Minister for Finance has the right to reallocate the appropriation related to funds for unforeseen events, which is specified in the annual State Budget Law, to ministries and other State central institutions in conformity with the decision regarding allocation of funds. Translation 2010 Valsts valodas centrs (State Language Centre) 10

11 (4) The Minister for Finance shall provide a quarterly report to the Saeima on the carried out reallocation of the appropriation related to funds for unforeseen events, which is specified in the annual State Budget Law. [23 November 2000; 20 December 2004; 14 November 2008; 1 December 2009] Section 13. Official Secrets (Secret Expenditures) (1) Secret expenditures provided for prescribed national security measures shall be approved in an annual State Budget Law without being described. (2) The Minister for Finance shall submit a description of secret expenditures in the State budget to a special commission of the Saeima, which shall provide a separate report on such to the Budget and Finance (Taxes) Commission prior to the approval of the State budget unless the Saeima has adopted a different decision. (3) [20 October 2005] [25 November 1996; 1 April 1998; 20 October 2005] Section 14. Information regarding Access to the Budget (1) Information regarding the State budget shall regularly be published in a form as is fully comprehensive and the general public can easily understand. All the main reports on the State budget shall be accessible to the general public. (2) Ministries and other central State institutions shall, within a month after proclamation of the annual State Budget Law, publish the resources approved for them in the State basic budget for covering of expenditure and expenditures, as well as the explanations thereof in their Internet homepages. A local government budget shall be available to the general public at every respective local government. (3) In order to inform the public regarding the aims and results of the activities of the institution, as well as regarding the use of State budgetary funding allocated the previous year, ministries and other State central institutions, all the bodies financed from the budget which are subordinate thereof, the bodies non-financed from the budget and local governments shall, by 1 July of the year following the financial year, prepare annual public reports and within a month after preparation shall publish them in their Internet homepages. Local governments shall submit annual public reports to the Ministry of Regional and Local Governments for publishing in its Internet homepage. A local government annual public report shall be available to the general public at every respective local government. The Cabinet shall determine the content of the annual public report and preparation procedures. [23 November 2000; 20 December 2004; 20 October 2005; 1 December 2009] Section 15. Making of State Budgetary Expenditures, Provision of Loans and the Maximum Increase in the National debt if an Annual Budget Law has not Come into Force If an annual State budget has not come into force before the beginning of a financial year, the Minister for Finance shall approve the State budgetary expenditures required for the State to operate, loan and borrowing limits, provided that: 1) services (functions), which have not been provided in the previous financial year, shall not be paid for, and the investments, which have not been realised in the previous financial year, shall not be made; Translation 2010 Valsts valodas centrs (State Language Centre) 11

12 2) the monthly expenditures shall not exceed one twelfth of the appropriations of the previous year; 3) the authorisations granted in accordance with this Section shall terminate when the annual State budget comes into force and all the expenditure from the beginning of the financial year shall be registered in accordance with the new annual State budget; 4) the financing of measures commenced in the previous financial year shall be continued; 5) the assignation of foreign financial assistance, European Union policy instruments and State budget co-financing funds for new measures (projects) financed within the scope of foreign financial assistance and European Union policy instruments is ensured; and 6) the transfer of European Community own resources to the European Community budget is ensured. [25 November 1996; 25 November 1999; 31 October 2002; 30 October 2003] Section Functioning of European Community Own Resource System, Disclosure in the State Budget Law and Transfer of Own Resources to the European Community Budget (1) The amount of European Community own resources shall be determined by European Community institutions in conformity with the legal norms of the European Community. If up to the submission of the annual State Budget Law to the Saeima the European Community institutions have still not specified the amount of European Community own resources, the forecast of the Ministry of Finance shall be included in the State Budget Law. (2) The Saeima in adopting the annual State Budget Law, shall include the amount of European Community own resources determined by European Community institutions in the annual State Budget Law without amendment. (3) The transfer of the European Community own resources to the European Community budget shall be conducted by the Ministry of Finance in conformity with the procedures specified by the European Commission. (4) The procedures for the payment of the European Community own resources shall be determined by European Community institutions in conformity with the legal norms of the European Community. (5) The Cabinet shall determine procedures for the functioning of the European Community own resource system. [31 October 2002; 14 November 2008] [1 October 1997] III. Formulation, Submission and Adoption of a Draft Annual State Budget Law (Package of Budget Bills) Section 16. Responsibility for the Preparation of the Draft State Budget Law (Package of Budget Bills) The Minister for Finance shall be responsible for a draft annual State Budget Law (package of budget bills), the explanations to be attached to it and the development of the medium term macroeconomic development and fiscal policy framework. [25 November 1996; 1 October 1997; 19 December 2006] Translation 2010 Valsts valodas centrs (State Language Centre) 12

13 Section Development Directions of Medium Term Budget Aims and Priorities (1) The Ministry of Finance, in co-operation with the State Chancellery and the Ministry of Regional Development and Local Government, shall develop a draft regulatory enactment for the next three financial years regarding the development directions of medium term budget aims and priorities and by 1 February of the current year shall submit it for approval to the Cabinet. The referred to draft regulatory enactment shall be developed by up-dating the development directions of medium term budget aims and priorities. Concurrently, the Minister for Finance shall submit to the Cabinet a draft of the State Budget Law (a package of budget bills) of the financial year and of medium term macroeconomic development and of development and schedule for submission of the fiscal policy framework. (2) [14 November 2008] (3) If funds are forecasted to the relevant subsequent financial years in conformity with medium term macroeconomic development and fiscal policy framework for financing of new policy initiatives, ministries and other State central institutions shall submit the new policy initiatives in accordance with the draft State Budget Law (a package of budget bills) and medium term macroeconomic development and development and schedule for submission of fiscal policy framework. (4) If funds are not forecasted to the relevant subsequent financial years for financing of new policy initiatives, then the draft regulatory enactment referred to in Paragraph one of this Section for the next three financial years regarding the development directions of medium term budget aims and priorities shall not be developed. [19 December 2006; 14 November 2008; 12 June 2009; 1 December 2009] 10. Izslēgt panta otrās daļas 5.punktu. Section Development of the Medium Term Macroeconomic Development and Fiscal Policy Framework (1) The Minister for Finance in co-operation with the Minister for Economics and in consultation with the Bank of Latvia shall each year up-date the medium term macroeconomic development and fiscal policy framework for the next three financial years and submit it to the Cabinet. (2) The medium term macroeconomic development and fiscal policy framework shall indicate: 1) a forecast of the medium term State macroeconomic situation; 2) the fiscal policy aims of the government in the medium term; 3) a forecast of State budget revenues in the medium term; 4) the maximum permitted total amount of State budget expenditures in the medium term; 5) [1 December 2009]; and 6) the maximum permitted total amount of State budget expenditures for each ministry and other State central institution in the medium term. (2 2 ) The Minister for Finance, in co-operation with the Minister for Economics and consulting with the Bank of Latvia shall, not less than once in a quarter, evaluate and, if necessary, review the forecast referred to in Section 16. 2, Paragraph two, Clause 1 of this Law. (3) The maximum permitted total amount of State budget expenditures in the medium term and the maximum permitted total amount of State budget expenditures for each ministry and other Translation 2010 Valsts valodas centrs (State Language Centre) 13

14 State central institution in the medium term shall be determined in conformity with the methodology provided for in Cabinet regulations, taking into account the conditions in Section 19, Paragraph five of this Law. (4) The Cabinet shall approve the medium term macroeconomic development and fiscal policy framework. (5) The Minister for Finance shall inform the Saeima regarding the medium term macroeconomic development and fiscal policy framework approved by the Cabinet. [19 December 2006; 14 November 2008; 12 June 2009; 1 December 2009] Section 17. Basic Principles for Development of Budgetary Requests (1) The basic principles in accordance with which ministries and other State central institutions shall develop and submit to the Ministry of Finance budget requests shall be determined by the Cabinet. (2) The basic principles for the development of budgetary requests shall include: 1) within the medium term macroeconomic development and fiscal policy framework, the indicated maximum permitted total amount of expenditure limits for ministries and other State central institutions planned budget expenditure division by programmes (sub-programmes) and expenditures in conformity with economic and government function categories; 2) other financial restrictions, which shall observed in budget calculations; 3) the procedures and time periods for the development of budgetary requests; 4) the indicators to be utilised in budget calculations; 5) budgetary request forms; and 6) other information necessary for the development of budgetary requests. [1 April 1998; 23 November 2000; 20 October 2005; 19 December 2006; 8 November 2007] Section 18. Development of Budgetary Requests (1) In accordance with the draft State Budget Law (a package of budget bills) and medium term macroeconomic development and development and schedule for submission of fiscal policy framework, ministries and other State central institutions shall develop and submit to the Ministry of Finance State budgetary requests in conformity with the instructions regarding the basic principles for the development of budgetary requests. (1 1 ) Ministries and other State central institutions shall develop State budgetary requests within the scope of the maximum permitted amount of State budget expenditures. (2) Authorisations relating to the maximum permissible amount of the State budget long-term liabilities shall be reflected in an annual State Budget Law separately from the appropriations for the year of the budget. (3) Bodies financed from the budget, which receive grants directly from the State budget, shall develop State budgetary requests in accordance with the basic principles for the development of budgetary requests. (4) [25 November 1999] [1 April 1998, 25 November 1999; 23 November 2000; 31 October 2002; 30 October 2003; 20 October 2005; 19 December 2006; 14 November 2008] Section 19. Analysis of State Budgetary Requests [19 December 2006] Translation 2010 Valsts valodas centrs (State Language Centre) 14

15 (1) [19 December 2006] (2) The Minister for Finance shall develop a draft annual State Budget Law on the basis of the medium term macroeconomic development and fiscal policy framework and budgetary requests, which are submitted in conformity with the provisions of Sections 17 and 18 of this Law. (3) The Minister for Finance shall evaluate budgetary requests on the basis of their conformity to the purpose intended, economy and efficiency and, if necessary, request necessary additional information for the relevant evaluation. Upon the basis of the results of such evaluation and information provided, the Minister for Finance shall take a decision regarding inclusion of the budgetary request in the draft State Budget Law up to its submission to the Cabinet. The Minister for Finance may at any stage of an examination of the draft State Budget Law express his or her point of view, and add necessary opinions, as well as the results of separate audits. (4) A budgetary request from the Saeima shall not be amended, in the course of the examination of budgetary requests, up to the submission of the draft budget law to the Saeima, without the consent of the submitter of the request. (5) The budgetary requests of the chancellery of the President, the Supreme Court, the Constitutional Court, the State Audit Office and the Office of the Ombudsman shall not be amended, up to the submission of the draft budget law to the Cabinet, without the consent of the submitter of the request. (6) The budgetary requests of district (city) courts, regional courts and the Offices of the Prosecutor shall not be amended, up to the submission of the draft budget law to the Cabinet, without the consent of the submitter of the request. The budgetary requests submitted by the district (city) courts and regional courts shall be compiled and transferred to the Ministry of Finance by the Ministry of Justice, but the budgetary requests submitted by the Offices of the Prosecutor shall be complied and forwarded by the Office of the Prosecutor General. (7) The Cabinet has the right to include funds for unforeseen expenditures in the State budget without a budgetary request. [25 November 1996; 1 April 1998; 25 November 1999; 23 November 2000; 31 October 2002; 19 December 2006] Section Inclusion of Guarantees Issued on Behalf of the State in the Draft Annual State Budget Law The procedures by which the ministries and other central State institutions shall include requests for guarantees to be issued on behalf of the State in the annual draft State Budget Law shall be determined by the Cabinet. [1 December 2009] Section 20. Examination of a Draft State Budget Law (a Package of Budget Bills) by the Cabinet (1) All ministries and other State central institutions shall receive a draft State Budget Law (a package of budget bills) and may, within a two-week period, submit to the Minister for Finance reasoned objections with respect to such draft. (2) The Minister for Finance shall seek to attain agreement with the heads of the relevant ministries and other State central institutions. If agreement is not attained, he or she shall attach, to the draft State Budget Law (the package of budget bills) to be submitted to the Cabinet, a statement of the objections regarding which agreement has not been attained. Translation 2010 Valsts valodas centrs (State Language Centre) 15

16 (3) The Minister for Finance shall submit the draft State Budget Law (the package of budget bills), the explanations thereof and an adjusted medium term macroeconomic development and fiscal policy framework to the Cabinet. (4) The heads of ministries and other State central institutions may refer questions not settled during the process of the examination of budgetary requests, to the Cabinet for the resolution thereof. (5) The Cabinet shall decide as to submission of the draft State Budget Law (the package of budget bills) to the Saeima. (6) The Cabinet shall accept the adjusted medium term macroeconomic development and fiscal policy framework and shall submit it to the Saeima. [1 October 1997; 23 November 2000; 19 December 2006; 14 November 2008] Section 21. Submission of a Draft Annual State Budget Law (a Package of Budget Bills) and Amendments to the Annual State Budget Law [25 November 1996; 23 November 2000] (1) By 1 October of the relevant year the Cabinet shall submit to the Saeima a draft annual State Budget Law (a package of budget bills) for the next financial year, proposals for amendments to laws in order that they conform with the budgetary requests, and explanations of the draft State Budget Law (a package of budget bills), as well as the medium term macroeconomic development and fiscal policy framework. (2) Explanations of a draft State Budget Law (a package of budget bills) shall contain: 1) an introductory report from the Prime Minister; 2) a report from the Minister for Finance where the main explanations of the draft State Budget Law (a package of budget bills) are provided; 3) information concerning the economic situation of the State and a description of the macroeconomic strategy underlying the State budget and scenario of macroeconomic development and evaluation of the risks thereof; 4) the total amount of revenue, calculations and an analysis according to types of revenue; 5) the total amount of expenditure, the breakdown of funds according to the budget classification categories and the basis for expenditures relating to new measures; 6) a summary regarding the financing of investments and sources of financing, annual operational expenditures, as well as new investment projects that exceed the limits of the financial year, and a summary regarding the necessary expenditures for the completion of investment projects in subsequent years; 7) [19 December 2006] 8) proposals for the amendments to be made in laws which are not included in the draft State Budget Law (package of draft budget laws) in order that such laws conform to the budgetary requests; 9) [19 December 2006] 10) the amounts of tax relief (abatements) and tax debts; 11) a draft consolidated general budget; 12) a summary of national debts and financial obligations of guarantees in respect of the current financial year and in the medium term, including in such calculations the allowable limits of actions of the government to cover expenditures which may arise fulfilling debt obligations attributable to the State budget; 13) calculations regarding equalisation of local government finances; 14) information regarding maximum permissible amount of the State budget long-term Translation 2010 Valsts valodas centrs (State Language Centre) 16