OECD Review of Latvia’s Fiscal Discipline Council
Latvia’s Fiscal Discipline Council (FDC) was established in 2013 by the Fiscal Discipline Law and began operating on 1 January 2014. Its mandate is to monitor the government’s compliance with fiscal rules, endorse the macroeconomic forecasts that are used to prepare the budget, assess the adequacy of the fiscal security reserve and assess the sustainability of national fiscal policy, among other responsibilities.
The review found that the FDC adheres to the OECD Principles for Independent Fiscal Institutions and has been effective in monitoring Latvia’s fiscal framework. Its research and reputation is independent and non-partisan, it fulfils the responsibilities prescribed in its legislation, and its scrutiny of the government’s macroeconomic forecasts has strengthened the credibility of budget planning assumptions.
The review identified several challenges that the FDC faces from its legislative design, such as the lack of a permanent legislative basis for its secretariat and its duties in relation to parliamentary committees. The OECD also provided several recommendations to increase the FDC’s influence. For example, the FDC should increase the capacity of its internal fiscal modelling, commit to a regular schedule for publishing long-term fiscal sustainability analysis, and improve the way it tracks engagement with its reports.