bnn.lv Latviski   bnn-news.com English   bnn-news.ru По-русски
Wednesday 24.04.2019 | Name days: Nameda, Visvaldis, Ritvaldis
LatviaLatvia

Auditor General: 2012 budget must not be mere mathematical exercise

FaceBook
Twitter
Draugiem
print
(+2 rating, 2 votes)

Baltic news, News from Latvia, BNN-NEWS.COM, BNN-NEWS.RU

Auditor General Inguna Sudraba

The government must look at the state policy as a whole, rather than view it in terms of accounting, as it is currently done. As long as there is no understanding of the need to adopt long-term decisions, Latvia will not be a national, strong and competitive country. Long-term vision is also necessary in formulating the 2012 state budget so that it is not only a mathematical exercise, the State Auditor General Inguna Sudraba told in an exclusive interview to the news portal BNN.

The Auditor General also talks about the need for the euro in Latvia, what the country should do with airBaltic and other public companies. She also grounds why, in her view, many of Latvians have no spine.

How do you evaluate the 2010 budget and what discrepancies has the State Audit Office found in its latest audits?

In the audit, we answer the question what the 2010 budget policy was like. When comparing the law on budget and its actual implementation, it can be concluded that expenditure exceeds revenues 74% or 387.8 million lats more than stipulated in the legislation. The way the deficit was increased over the year is not unlawful if viewed from the perspective of approved standards, as they did allow increasing spending in certain positions. However, we believe that this is not right, because this increase is not linked to unexpected expenses and emergencies. The substantial increase of several hundreds of million lats was meant for liabilities which were already known before. Therefore, it can be concluded that the budget drafting process neglected the factual situation, for example, the governmental policy and the necessary financial resources.

We found also other factors indicating mismanagement from the part of the government.

What exactly this means for the Latvian economy and what consequences it might have?

The higher the excess, the larger the budget deficit and the debt. This means that the debt, which the government planned in early 2011, grows exactly the amount expenditure exceeded revenue. Moreover, the borrowed money must be repaid. This imposes additional burden and shows the standard of living future generations will have.

Can we say that the budget was drafted in an irresponsible manner?

The process was not managed right indeed. Good management means clear policy that also indicates the necessary resources for reaching goals. At the moment we are living just for today, instead of planning and acting long-term, which would allow to see the possible consequences and correct mistakes timely. This is necessary so that we do not have to pay a high price for them in the future.

Does that mean that we are living just for this one moment and spending what we actually cannot afford?

I can relate to that to a large extent. If I saw long-term plans and goals, then I could say that we are thinking several steps ahead and doing our best to reach our goals. Currently, I see neither motives, nor indicators of what we want to achieve. SAO’s audit shows that the budget performance is not tied to a clearly defined policy.

Can we see this lack of goals also in the management of airBaltic?

Actually, what we have been reading about airBaltic management resembles a micro-model of the state. It is the same short-term thinking. We should have a clear policy and plan why exactly we need such an airline. I can hardly belive it is possible to find oneself in the current situation if there is regular supervision with an aim to monitor whether the company’s activities are aimed at reaching goals.

Do you approve of the government’s decision to invest 57.6 million lats in its national airline? Will this money save airBaltic?

Given the current situation, it is no longer possible to take one and the best decision, because whatever decision is needed to finally put an end to the situation. Each and every state must think of how the economic situation will develop and how the govenrment will be able influence it. I believe that the more public companies the state owns, the better it can manage its economy. It is a great risk to abandon state enterprises in favour of private investors, because they can suddenly decide that it is no longer profitable for them here in Latvia and move to some other country.

It is crucial that the state clearly defines its understanding of what exactly it wants from the company and why it is needed at all.

Maybe the state itself is unaware of what it expects from airBaltic?

In our audit we also propose suggestions in an important matter that we have been discussing for three years already. The state and the govenrment need a single management policy. The state owns huge investments in various companies, but it also needs an understanding what exactly it wants from them so that they function as instruments in implementing the public policy. This does not apply only to airBaltic, but all state enterprises.

Have all the discrepancies found in the previous audits been eliminated and the situation is improving?

The audit is not rounding up once it is closed officially. It ends when our proposals are taken into account, because we continue keeping an eye on the process. 84% of our suggestions are carried out in a medium-term. Usually, most of terms are being extended or the proposals lose their topicality.

The situation is definitely improving in respect to how precise reports are. However, efficient use of resources is still an issue.

Thus, we as the SAO have taken a non-traditional step by drafting proposals for the budget planning and introduction process. They provide responsibility for the way funds are used, as opposed to the current situation when only legal use is what matters. Money needs to be spend efficiently and usefully, not merely spent and that’s it. It is already a permanent issue that the state fails to understand that efficient use of tax payers money is crucial. It is not enough with mere complying with legal norms.

Ministries forecast that they will fail to acquire 40 million lats from EU funds for 2011. Does that suggest wrong planning as well?

Given how EU funds were acquired last year, I can hardly call it funds acquisition at all. Up to tens of million lats were transferred in pre-payments, but the Finance Ministry claims that all funds have been acquired. What we see is that practically it is not so, because funds are just transferred from one account to another.

I do not like this term “acquisition”, because what I understand from it is use of resources, instead of mere transferring of them in order they would no longer be present in the budget report. We can speak of acquisition only when the money is invested in projects that bring further yield. Consequently, maybe even more than these 40 million lats will not be acquired at all.

How could it be possible to control that money flows into the economy and brings yield?

This calls for responsibility for results. For the time being, officials suffice with responsibility of showing an empty bank account in Brussels. If the programme provides that, for example, new jobs will be created if EU funds are acquired, it should be the responsibility of officials to see to it that it really happens.

It is no art to spend money in benefits, scholarships and training programmes with no actual contribution to people, skills and new jobs.

Do you support Unity’s proposal to set up a “rainbow” coalition?

Latvian population makes up only two million people. It is unacceptable that a country with such a small population fails to agree upon a common understanding on the future development of the state. Inner energy currently directed to quarrels and offenses should actually go to the development of the country.

One must not live thinking merely of the fact that it is good today. We must all the time think about what kind of a country we will pass on to future generations.

Economist Raita Karnite once told in an interview to BNN that tough times are ahead of Latvia. Do you believe a double dip recession will hit Latvia?

It is very important to truly perceive the reality and find out timely how to solve problems. If the leading economy – the U.S. cuts consumption, it will definitely hit the whole world. It has been reported that China is losing its growth rates. Consumption keeps decreasing also in Europe. It all leaves an impact on the economy. It is crucial to know the plan according to which we live, so that global economic processes influence us as little as possible.

Will Latvia manage to join the eurozone in 2014 and do we need the single currency at all?

The question whether we need the euro at all depends on the policy we are carrying out. I cannot define strict arguments why we do need the euro. Conditions that accompany the euro introduction are important principles that should be introduced any way, for example, the fact that spending must be in balance with revenues.

I doubt that the euro is what we absolutely need. For the time being, I see only those arguments that are tied to the euro introduction criteria – the debt, deficit and inflation. These factors are important also when on their own – without the euro.

The state needs to see its policy as a whole. It should not perceive budget as a mere mathematical task. As long as there is no understanding of the need to adopt long-term decisions, Latvia will not be a national, strong and competitive country. Long-term vision is also necessary upon formulating the 2012 state budget so that it is not only a mathematical exercise.

Is this our biggest problem why we are in the current situation?

If there were a basic understanding that this is our country and it is us who determine in what type of a country we want to live, certainly there would not be such a situation as it is now. I see that there are few people in Latvia with a spine and able to take responsibility. People’s objectives are very primitive – opportunity to take some post, without understanding that the post is a tool to achieve the country’s goals.

Dans Titavs, board member of the Latvian Exporters and Investors Club, has indicated that the parliamentary election outcome has shown that people are fed up with oligarchs and their anti-campaigners. What conclusions have you made after assessing the election outcome?

Some part of the society no longer has who to vote for. People find it difficult to vote for any of the political forces. They voted for Zatlers Reform Party because they want changes. Maybe they are not even considering how viable such changes actually are. They simply want to believe that it will be better in future.

What do you expect from the new govenrment?

It needs to draft a long-term plan once and for all. The most urgent task is all linked to 2012 budget. However, it should not be a mere mathematical exercise, but a task that calls for in-depth understanding.

Do you believe the government will manage that?

I would like to believe that. I am always hoping for the positive, because negative thinking attracts all the negative.


Leave a reply

  1. Richie says:

    A clever woman – knows what she is speaking about.

  2. Kim says:

    She has some good points.

  3. cinderella says:

    very nice woman!

  4. Leo says:

    She is pathetic.Is she living on a cloud and doest not see what is going on around. The budget is already made by the IMF and whatever the puppets in office in coming weeks ,nothing will change Increases of taxes and cut in socials budget.

Medicines for people with mental disorders to become more accessible in Latvia

To improve accessibility of medicines for people suffering from psychological and behavioural disorders, Latvia’s government decided to expand the list of diagnoses eligible for state-compensated medicines on Tuesday, 23 April.

Belarus halts exports of low quality oil products to Baltics, other neighbours

Belarusian Oil Company has announced the temporary suspension of light oil products to the Baltic states, Poland and Ukraine explaining that low-quality oil products have been supplied by Russia to Belarusian refineries.

Producer prices in Latvia: increase of 4.1% in March

Compared to March 2018, average level of producer prices in Latvian industry increased by 4.1 % in March 2019. The level of prices of products sold on the domestic market rose by 6.5 % and that of exported products – by 1.9 %.

Saeima deputy confident on the need to dismiss National Mass Media Council

Considering recent development, the National Electronic Mass Media Council should be dismissed, says head of Saeima’s Human Rights and Public Affairs Committee Artuss Kaimiņš.

Estonian President continues to meet with ministerial candidates

As outgoing Estonian Prime Minister Jüri Ratas' is likely to form his second government with the controversial Conservative People's Party of Estonia and the national-conservative Pro Patria, Estonian President is meeting with his ministerial candidates.

Teachers demand from Latvia’s ministry specific amendments to regulations

Latvian Trade Union of Education and Science Employees sent a letter to Latvia’s Education and Science Ministry on Tuesday, 23 April. In it, representatives demand strict guarantees and specific amendments to regulations to ensure increase of wages for teachers in accordance with the schedule.

Catalonia – key issue in Spanish pre-election debate

As Spain nears its early general election on Sunday, April 28, its outgoing Prime Minister faced criticism from his opponents over Catalonia's secession crisis.

Latvian minister orders closure of Deglava Bridge in Riga

Latvia’s Interior Affairs Minister Sandis Ģirģens has ordered State Police to close down Deglava Bridge starting with Thursday, 25 April.

Sri Lanka death toll rises. Authorities had been warned about possible attacks

In Sri Lanka, the number of people killed in attacks on churches and hotels has reached 290 people, while it has been revealed that national authorities had been warned about possible attacks.

Road construction company Binders to attract workers from Ukraine and Belarus

Latvian road construction company SIA Binders experiences a shortage of workers. Because of that, the company plans to attract guest workers from Ukraine and Belarys, says Bindars board chairman Aigars Sēja.

Ukrainian presidential election won by Zelensky on hopes of change

The run-off of the Ukrainian presidential election has been won by comedian Volodymyr Zelensky, who has promised change and better relations with Russia.

Air temperature to reach +23° C in Latvia this week

Dry weather will remain in most of Latvia this week. The sun will shine often and there will be slow eastern and south-eastern wind. However, strong wind is expected to come on Wednesday, 24 April, and precipitation is expected at the end of the week.

Forevers: 615 tonnes of grilled meat was consumed in Latvia last year

615 tonnes of meat products for grilling was sold in Latvia in 2018, according to sales data from meat processing company Forevers.

Every day hens in Latvia produce an egg for every resident

The number of laying hens in Latvia, when compared to 2017, had increased 19.2% in 2018, reaching 3 million, according to data from the Central Statistical Bureau of Latvia. Compared to the previous year, the total number of domestic birds has increased 9.3%, reaching 5.4 million, which is the largest index since 1992.

73% of residents believe they benefit from Latvia’s membership in EU

Approximately 73% of residents believe Latvia benefits from membership in the European Union. Interviewed residents mainly outline job opportunities, economic growth and security, according to the latest data compiled by Eurobarometer.

General government budget deficit in Latvia reached EUR 295.4 million last year

In 2018 general government budget deficit accounted for EUR 295.4 million or 1 % of the Gross Domestic Product and general government consolidated gross debt amounted to EUR 10.6 billion or 35.9 % of the GDP.

Egils Levits optimistic about his chances becoming Latvia’s president

Presidential candidate and European Court of Justice Judge Egils Levits is optimistic about his chances of becoming Latvia’s next president.

Estonia’s government to be formed by standing Prime Minister Jüri Ratas

On Thursday, 17 April, Estonia’s parliament entrusted formation of the country’s government to Centre Party’s chairman and standing Prime Minister Jüri Ratas.

At least 29 die as German tourist bus runs off road in Portugal

At least 29 people were killed and 27 were injured when a German tourist bus ran off the road on Madeira Island in Portugal, as reported by BBC.

EY: businessmen show very positive outlook towards global economy

The latest Ernst&Young EY Global Capital Confidence Barometer reveals a generally optimistic outlook businessmen have around the world – 93% of interviewed company CEOs believe the economic situation in the world is steadily improving. The same opinion was voiced by 73% of interviewed CEOs last year.

Orkla Latvija signs contract for construction of Laima manufacturing plant in Ādaži

On Wednesday, 17 April, Orkla Latvia signed a contract worth EUR 8.9 million with construction company Merks on the construction of a Laima manufacturing plant in Ādaži, BNN was told by Orkla Latvija representative Lineta Mikša.

As police arrive, Peru’s ex-president commits suicide

Ex-president of Peru Alan García committed suicide on Wednesday, 17 April, when police arrived to arrest him for corruption.

Estonia’s president to meet with Putin; the two will discuss Baltic security

On Thursday, 18 April, Russia’s President Vladimir Putin will meet with Estonia’s President Kersti Kaljulaid, as reported by Estonian public media ERR.

Europe’s borders to be reinforced – a specialist corps to be formed by 2027

On Wednesday, 17 April, the European Parliament approved a new law to strengthen Europe’s border and coast guard, as reported by EP representative in Latvia Signe Znotiņa-Znota.

Latvian residents engage in marriages more often than before

Over the past three years the number of registered marriages has risen slightly. In 2018, 13.4 thousand marriages were registered, which is 200 marriages more than in 2017 when the increase recorded over the year constituted 148 marriages.

Most read

Most commented