Budget, Financial Services, Latvia

Ivars Godmanis.

Godmanis expressed his views regarding this matter in LNT television broadcast "900 sekundes" today.

Godmanis said, he would support such budget formation principles if "we could live on this year normally, if there would be no interrupted payments", however, if the budget amendments are submitted to Saeima only in June, the State Treasury might then have to try to "make the ends meet with no money available," as the international lenders will only provide the next part of the international loan to Latvia after the budget amendments are passed.

Godmanis' suggestion to the current government is to act more quickly and to pass the budget amendments already in May. "If this happens in June, the State Treasury data shows, it will be too late," the ex-prime minister commented.

At the same time, Godmanis admits that Repse's decision has also some positive aspects, because the current state budget structure is complicated and lacks clarity, for example, it is impossible to track down, how the salaries are paid to doctors as they are not paid by the government, but by hospitals, which have signed contracts with the Health Compulsory Insurance State Agency.

"Salary system should be transparent and easy to understand," Godmanis said, adding that also the international lenders have drawn attention to this.

Today the government will decide on further timetable for preparing amendments to this year's state budget, as the Ministry of Finance confirmed to LETA.

Amendments to the national budget will be prepared according to completely new principles, and the amendments will be forwarded to Saeima only at the beginning of June, the Finance Minister Einars Repse (New Era) told reporters yesterday.

It is clear that the usual principles for structuring the budget can no longer be used, a new approach is necessary, stressed Repse.

Extensive structural reforms will be carried out to achieve a non-deficit budget, a political decision will have to be made which functions the state will provide funds for from now on. Distribution of budget funds will only be considered after that, Repse explained.

"We will have to start structural reforms from scratch," stressed Repse.

According to Repse, ministries have already been assigned to draw up structural reform plans for their respective ministries, which will be considered by the government. Any specific decisions will be made at end-April or the beginning of May, and the budget should be submitted to Saeima at the beginning of June.

International lenders also approve of such a schedule, said Repse.