Developing potential budget reform for Latvia: Shifting from conventional to contemporary budgeting

Modern changes in politics and economics around the world are occurring so rapidly and frequently that outdated budget planning principles no longer have time to respond to these challenges. That is why the development of ideas for modernizing the principles of budgeting in the Republic of Latvia is very relevant. The purpose of this paper is to develop recommendations for changes in approaches to state budgeting. In the course of the study, the methods of statistical analysis, synthesis, and structuring were used. Using the methods of retrospective and comparative analysis, the changes in the budget legislation of Latvia that have taken place over the three decades of restored independence were also studied. The study analysed the existing procedure for creating and approving the budget and confirmed the sufficient balance of different branches of government in this process. In addition, the study identified weaknesses in the current system of approving and executing the expenditure side of the budget, problems in the amendment procedure and difficulties in processing the necessary allocations during the year. Based on the current experience of other European countries, ideas were proposed to correct the identified problems and improve the budget system – both at the stage of formation and at the stage of control over the actual distribution of expenditures. In particular, potential reforms included the creation of documents based on medium-term timeframes, automation of the system of reallocation of funds during the financial year, and steps to improve communication between the government and civil society. The practical significance of the study lies in the creation of a potential reform programme that may be of interest to the Cabinet of Ministers of Latvia and the Budget Committee of the Saeima