The Fiscal Discipline Council (FDC) believes that the hospital network reform approved by the government violates the requirements of the law. The reason is that additional expenses are provided for, but the sources of their funding have not yet been determined.
The Fiscal Discipline Council sent a letter to Prime Minister Andris Kulbergs, Finance Minister Maris Kucinskis, and the Chair of the Budget and Finance Commission of the Saeima, Aiva Viksne, stating that the government’s decision of July 28 regarding the reform of the hospital network does not comply with the requirements of the Fiscal Discipline Law.
This concerns amendments to the organization and payment of medical services, which provide for the allocation of an additional 14 million euros to the Ministry of Health to improve the accessibility of medical care in the regions and ensure the operation of regional hospitals in 2027–2030.
The government instructed the Ministry of Finance to find these funds by reviewing the functions of the public sector and increasing efficiency, as well as to include the corresponding expenses in the draft budget for 2027 and the medium-term budget plan.
However, as noted by the FDC, no decisions were made simultaneously to offset the increase in expenses. So far, the Ministry of Finance has only been tasked with preparing proposals, which the council believes is insufficient to meet the requirements of the law.
This is important because Latvian legislation requires that if the state increases expenses or reduces budget revenues, measures must be approved simultaneously that fully offset these changes through savings or additional revenues.
At the same time, the Fiscal Discipline Council does not dispute the need for additional funding for healthcare. The letter emphasizes that the issue is not about the reform itself, but about compliance with the rules for planning public finances.
The FDC also reminds that Latvia is obliged to comply with the updated budgetary rules of the European Union. Furthermore, at the beginning of 2025, the EU Council approved the country’s fiscal-structural plan, which limits the growth rate of public expenditures.
Additional concern arises from the situation with public finances. According to the latest forecasts from the Ministry of Finance, the fiscal space will remain negative in the coming years: in 2027 it is estimated at minus 28 million euros, in 2028 at minus 279.1 million euros, in 2029 at minus 237.8 million euros, and in 2030 at almost minus 936.2 million euros.
The council points out that the problem goes beyond a single reform. According to the Ministry of Finance, already approved government initiatives, for which funding sources have not yet been found, will require almost 220 million euros in 2027. Subsequently, this amount will only grow, exceeding 420 million euros per year.
In this regard, the FDC recommends that the government either adopt regulations that fully offset the additional costs of the hospital network reform or postpone the entry into force of the changes until funding is secured within the framework of the state budget formation.
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