Latvia, Детальна інформація

Latvia
Тип документу: Реферат
Сторінок: 9
Предмет: Економіка
Автор: Маличенко Дмитро
Розмір: 16.8
Скачувань: 1866
EIU forecasts that Latvian foreign debt will rise to $500 million by the end of 1996 and $690 million by the end of 1997. Debt-service costs will most likely continue to remain low as much of the credit is available on concessionary terms. Recent loan agreements include a 17-year $14 million credit from the World Bank for rehabilitating the heating system, credits to assist in privatization, and transport infrastructure (EIU, 1995).







Recent budgetary conditions...



Efforts to improve budgeting, budget execution, and accountability in government finances continue in Latvia. Budgetary law entitled "Law on Budget and Financial Management" was passed by Parliament in April of 1994. This law sets rules regarding formulating, approving, financing, implementing, and auditing the annual budgets of central and local governments. According to this law, the Cabinet of Ministers must submit annual central government budget proposals to Parliament by October 1 for approval of the year preceding the new budget. If the annual budget has not been approved prior to the implementation date, the government must operate with the preceding year's budget allocations until the new budget is approved. "The law also regulates government borrowing and lending, the granting of guarantees, and the budgetary powers and procedures for local governments." (IMF, 1995).



The budget law also creates a Treasury Department within the Ministry of Finance which is responsible for the execution, reporting, and accounting of the state budget. (A Treasury area was created by the Ministry of Finance in 1993 which was mainly responsible for the auction of short-term (28 day) treasury bills.) The Treasury Department, since creation, has eventually expanded to include other functions such as the responsibility of assets and liabilities and the social security system.



Efforts were also made to increase efficiency in the collection of taxes. The State Finance Inspection Board, responsible for the collection of domestic taxes, and the Customs Department, responsible for foreign trade taxes, were combined in accordance with law passed by Parliament in 1993. The new department, the State Revenue Service, began work in mid-1994.







Budget and fiscal developments...



Latvia has had a pattern of tight fiscal management, and despite the pressures on revenue and expenditure arising from the transitional economy, government finances (as a percent of GDP) have remained relatively stable. "Government has taken steps to improve the administration of taxes on goods and services in an effort to allow for additional expenditure on both investment and wages and pensions within budget organizations.".(EIU, 1995). Tax measures include an increase in VAT rates and the introduction of excise taxes on gasoline and cars. Improvements have been made in the collection of taxes at the border and enforcement of tax evasion penal codes. Efforts are also being made to computerize the collection of the VAT and excise tax.



Government surpluses have fluctuated around approximately 1% of GDP. Local and central governments have remained generally balanced or have shown a slight surplus. The Ministry of Finance repaid it's debt to the Bank of Latvia in early 1993 through foreign financing. "Due to budget proposals, government bond issuance, and tax measures, the general government financial deficit has continually been reduced to within approximately 1.5% of GDP.".(World Bank, 1995). Revenues from tax collection have in general continued to increase while expenditures, despite increases, have been kept below budget levels.



"Within the past several years, attempts have been made to adjust specific tax structures to offset the increasing expenditures by unifying the profit tax to within a range of 25-35% and switching the graduated income tax schedule over to a flat income tax rate of 25%.".(World Bank, 1995). Minimum wages have also increased 100% since 1994.







Intergovernmental Relations



The general government is composed of a central government, local government, and extrabudgetary funds including the Social Security Fund, the Environment Protection Fund, the State Privatization Fund, and the Foreign Exchange Budget. Local government revenue is obtained through large transfers of funding from central governments and personal income tax collection within their jurisdiction. VAT and profit taxes go directly to the central government, while approximately 50% of personal income tax goes directly to local government. The remaining 50% is held and administered through the Local Budget Equalization Fund (LBEF), "developed to adjust for disparities between different regions and cities by making available additional resources"(EIU, 1995). Funding transfers from LBEF to local government for services are determined by formula. LBEF funding for local government services includes: investment, education, health care, social benefits, and grants. Local governments are responsible for maintaining these services. Local government expenditures for social benefits constitutes over half of total government spending in this area. LBEF infrastructure allocations are determined separately, cities and rural areas receive funding based on population. (IMF, 1995).



Currently, local governments are largely responsible for municipal services such as water, sewage, and solid waste collection and disposal. Local governments currently do not have the resources necessary to make investments such as the rehabilitation of existing sewage facilities. "The need for external financing to support public infrastructure services and municipalities has become a priority with both the Government's Public Investment Program and the Bank's Country Assistance Strategy.".(EIU, 1995).



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