The Foreign Investors’ Council in Latvia (FICIL) highly commends the Latvian government for taking decisive steps to review every budget position within the Ministries of Finance, Economics, and Transport. By reassessing priorities and evaluating the necessity of expenditures, the aim is to establish a results-oriented budget. These three ministries are expected to submit an expenditure analysis to the government by February 15, 2025, and launch a pilot project to determine the most effective way to review spending. Based on their experience, other ministries will adopt this approach in future budget planning. FICIL sees this initiative as a significant step toward an efficient, results-driven public administration, fostering sustainable economic growth for Latvia. FICIL appreciates the government’s decision to undertake this initiative and eagerly awaits the outcomes of the expenditure analysis and pilot project.
For several years, FICIL has actively advocated for performance-based budgeting as a crucial step in improving the efficiency and transparency of public spending.
“This budgeting approach will not only enhance the transparency and accountability of public finances but also significantly bolster investor confidence in the Latvian market. International investors favor a stable, transparent, and predictable budget policy, which creates a secure and attractive environment for investments. Moreover, public trust in government operations and financial management will grow, especially with the benefits of eliminating unnecessary expenditures and prioritizing strategic goals for long-term development,” emphasized Reinis Āzis, FICIL’s public sector reform work group leader.
Drawing from examples in other countries, a results-oriented budgeting approach helps define clear goals, regularly evaluate outcomes, and ensure more efficient resource allocation. Additionally, this method reduces bureaucracy, strengthens accountability, and promotes the development of sustainable solutions – an essential factor in meeting growing public demands for responsible governance and transparency.
FICIL is fully prepared to support the Latvian government in implementing these crucial reforms by sharing expertise and recommendations rooted in international best practices. This initiative underscores the government’s ambition and commitment to providing modern public administration that meets the needs of both Latvian citizens and investors alike!