The translation of this document is outdated.
Translation validity: 01.01.2009.–30.06.2009.
Amendments not included:
12.06.2009.
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The Saeima1 has adopted
and the President has proclaimed the following Law:
Law On Long-Term Stabilisation
Reserve
Chapter I
General Provisions
Section 1.
This Law prescribes the procedures for the creation of a
long-term stabilisation reserve, the use, management, accounting
of funds and the preparation of reports.
Section 2.
The long-term stabilisation reserve shall be an instrument of
fiscal policy, which is created from the assets at the disposal
of the State budget in order to ensure the financing of measures
for the reduction and prevention of the effects of elevated
fiscal, economic and social risks caused by macro-economic
processes in situations where it is impossible to ensure it from
other sources of financing from the State budget or the provision
thereof would require large expenditure from the State
budget.
Chapter II
Creation of Long-Term Stabilisation Reserve
Section 3.
The long-term stabilisation reserve shall be created from:
1) the funds which are transferred from the State Property
Privatisation Fund;
2) the funds from the State budget, which are formed by the
excess of tax and non-tax revenues of the State basic budget over
the amount of revenues specified in the State budget law of the
financial year if there is a financial surplus in the State basic
budget according to the results of implementation of the State
budget;
3) the funds which are acquired from transactions related to
the management of the funds of the long-term stabilisation
reserve; and
4) the funds from the State budget, which shall be paid into
the long-term stabilisation reserve in accordance with the law on
the State budget for the current year.
Section 4.
(1) The Cabinet shall take a decision regarding the transfer
of the funds of the State Property Privatisation Fund into the
long-term stabilisation reserve in accordance with the Law On
State and Local Government Property Privatisation Funds.
(2) After examination of the report referred to in Section 26
of this Law, the Cabinet shall take a decision regarding the
transfer of such funds from the State budget, which are formed by
the excess of tax and non-tax revenues of the State basic budget
over the amount of revenues specified in the State budget law of
the financial year, into the long-term stabilisation reserve.
Section 5.
(1) The Ministry of Economics shall, in accordance with the
procedures specified by the Cabinet and within the framework of a
programme for use of the funds approved by the State Property
Privatisation Fund, ensure the transfer of the funds of the State
Property Privatisation Fund into the long-term stabilisation
reserve account opened by the Bank of Latvia.
(2) The Treasury, within a time period of three working days,
shall:
1) ensure the transfer of the funds to the long-term
stabilisation reserve account opened by the Bank of Latvia from
the date of taking the decision referred to in Section 4,
Paragraph two of this Law; and
2) ensure the transfer of the revenues from transactions
related to the management of the funds of the long-term
stabilisation reserve to the long-term stabilisation reserve
account opened by the Bank of Latvia from the date when such
funds have been acquired.
(3) The Treasury shall ensure the transfer of such funds from
the State budget, which are to be paid into the long-term
stabilisation reserve in accordance with the law on the State
budget for the current year, into the long-term stabilisation
reserve account opened by the Bank of Latvia.
Chapter III
Procedures for Use of the Funds of the Long-Term Stabilisation
Reserve
Section 6.
The Cabinet shall take a decision regarding the necessity to
utilise the funds of the long-term stabilisation reserve in order
to commence the implementation of measures for reduction of the
effects of fiscal, economic and social risks upon the
recommendation of the Minister for Finance.
Section 7.
After the Cabinet has taken the decision referred to in
Section 6 of this Law, the Minister for Finance after evaluation
of recommendations of the members of the Cabinet shall submit to
the Cabinet proposals for taking of a decision regarding the
financing of measures for the reduction of the effects of
elevated fiscal, economic and social risks and measures for
stabilisation of the economic situation from the funds of the
long-term stabilisation reserve and the conditions of financing
(hereinafter - Cabinet decision regarding the granting of
funds).
Section 8.
The Minister for Finance, in submitting proposals to the
Cabinet regarding the granting of funds from the funds of the
long-term stabilisation reserve, shall inform regarding the
impact of the expenditure or loans of measures financed from the
long-term stabilisation reserve on the fiscal situation of the
State budget and the total amount of expenditure of the State
basic budget. According to the Cabinet decision regarding the
granting of funds, if the total yearly amount of expenditure or
loans of measures financed from the long-term stabilisation
reserve in the financial year:
1) exceeds 3 per cent from the amount of expenditure from the
State budget approved for the financial year - the Ministry of
Finance in co-operation with all ministries shall prepare and the
Minister for Finance shall submit to the Cabinet a draft law on
amendments to the law on the State budget for the current year;
or
2) does not exceed 3 per cent from the amount of expenditure
from the State budget approved for the financial year - the
Minister of Finance shall submit to the Saeima the Cabinet
decision regarding the granting of funds.
Section 9.
The Minister for Finance shall issue an order regarding the
granting of appropriations from the long-term stabilisation
reserve or shall enter into a contract regarding the issuance of
loans from the long-term stabilisation reserve and servicing of
such loans in accordance with the conditions of financing
specified in the Cabinet decision taken in accordance with the
procedures specified in Section 7 of this Law if the Budget and
Finance (Taxation) Committee of the Saeima has not
objected to it within five working days after the date of receipt
of the respective Cabinet decision.
Section 10.
(1) In cases where the Budget and Finance (Taxation) Committee
of the Saeima partially objects to the Cabinet decision,
the Minister for Finance shall issue an order according to the
decision of the Budget and Finance (Taxation) Committee.
(2) In cases where the Budget and Finance (Taxation) Committee
of the Saeima completely objects to the Cabinet decision,
the Minister for Finance shall repeatedly send to the Cabinet the
proposals regarding the granting of funds from the funds of the
long-term stabilisation reserve, as well as the decision of the
Budget and Finance (Taxation) Committee.
Section 11.
Measures financed from the long-term stabilisation reserve
shall be presented in the law on the State budget for the current
year individually as a budget programme specifically created by
each ministry or another central State institution to which
appropriations from the State budget are granted.
Section 12.
Ministries and other central State institutions shall utilise
the appropriations granted from the long-term stabilisation
reserve until the end of the financial year. Loans financed from
the long-term stabilisation reserve shall be utilised until the
end of the financial year.
Section 13.
The Treasury shall, until 20 January of the year following the
accounting year, ensure the transfer of funds in the amount of
the non-acquired appropriations and non-issued loans from the
State budget account to the long-term stabilisation reserve
account opened by the Bank of Latvia.
Section 14.
The Treasury shall, within five working days after receipt of
repayment of the loan financed from the long-term stabilisation
reserve, ensure the transfer of the funds to the long-term
stabilisation reserve account opened by the Bank of Latvia.
Section 15.
Ministries and other central State institutions shall, within
five working days after the coming into effect of the order of
the Minister for Finance regarding the granting of appropriations
or the coming into force of amendments to the law on the State
budget for the current year, ensure the submission of the draft
plan for financing to the Treasury. The Treasury shall register
it within two working days and grant assignation for expenditure.
The Treasury shall ensure the transfer of funds in the amount of
the appropriations granted or the loan to be issued from the
long-term stabilisation reserve account opened by the Bank of
Latvia to the account of the State budget.
Section 16.
Ministries and other central State institutions shall be
responsible for the appropriations, which are granted from the
long-term stabilisation reserve, to be used pursuant to the
objective specified by the Cabinet.
Section 17.
Ministries and other central State institutions shall ensure
that a separate cost estimate is drawn up and approved for each
measure financed from the long-term stabilisation reserve, as
well as a report on the implementation of the respective measure
is prepared concurrently with the annual report of an
institution.
Chapter IV
Management of Funds
Section 18.
The Treasury shall ensure the management of the funds of the
long-term stabilisation reserve. The Treasury shall cover all
payments related to the management of the funds from the funds of
the long-term stabilisation reserve.
Section 19.
Funds of the long-term stabilisation reserve shall be managed
separately from the other funds of the State budget, and the
strategy for investment of these funds shall be approved by the
Minister for Finance.
Section 20.
The following shall be determined for the management of
financial risks in the strategy for investment of the funds of
the long-term stabilisation reserve:
1) restrictions in relation to investment subjects and the
types of financial instruments admissible for making investments,
using the credit ratings of internationally recognised credit
rating agencies;
2) restrictions on investments for each type of financial
instruments admissible for making investments;
3) restrictions of the structure of investment currencies;
4) restrictions of geographic and sectoral diversification of
investments and other restrictions for the management of
financial risks; and
5) methods of analysis to be utilised in the management of the
financial risks of investments.
Section 21.
Derived financial instruments shall be utilised in the
management of the long-term stabilisation reserve.
Section 22.
It shall be allowed to invest the funds of the long-term
stabilisation reserve in the following financial instruments
pursuant to the restrictions specified in the strategy for the
investment of the funds of the long-term stabilisation
reserve:
1) in securities issued or guaranteed by State and
international financial institutions, except securities issued or
guaranteed by Latvia;
2) in securities issued or guaranteed by local governments,
except securities issued or guaranteed by local governments of
Latvia;
3) in equities of commercial companies if they are included in
the stock exchange listing of at least one European Union Member
State or Member State of the European Economic Area, or Member
State of the Organisation for Economic Co-operation and
Development, as well as in debt securities of commercial
companies;
4) in investments in the Bank of Latvia and credit
institutions which have received a licence for operation of a
credit institution and which are allowed to provide financial
services in at least one European Union Member State or Member
State of the European Economic Area, or Member State of the
Organisation for Economic Co-operation and Development; and
5) in investment funds if the respective investment fund is
registered in a European Union Member State or a Member State of
the European Economic Area, or a Member State of the Organisation
for Economic Co-operation and Development.
Chapter V
Accounting of Funds and Reports
Section 23.
The Treasury shall ensure the accounting of the long-term
stabilisation reserve and that an annual report on the long-term
stabilisation reserve is prepared pursuant to the regulatory
enactments regarding accounting and reports.
Section 24.
Once every quarter, until the tenth of the month following the
accounting period, the Treasury shall submit to the Minister for
Finance a report on performed transactions.
Section 25.
An annual report on the long-term stabilisation reserve and
investments thereof shall be an integral part of the report of
the financial year on implementation of the State budget and on
budgets of local governments (financial condition thereof) and
shall be subject to the same control as the report of the
financial year on implementation of the State budget.
Section 26.
Once a year, until 1 March of the financial year following the
accounting year, the Ministry of Finance shall prepare and the
Minister for Finance shall submit for examination by the Cabinet
a report on the following information of the financial year:
1) regarding revenues of the State basic budget and the result
of implementation of the State basic budget; and
2) regarding revenues of the long-term stabilisation reserve,
financial transactions and payments related thereto and measures
financed from the long-term stabilisation reserve.
Transitional Provision
Revenues from the management of the funds of the long-term
stabilisation reserve, which are received until the date of
coming into force of this Law, shall remain in the long-term
stabilisation reserve.
This Law shall come into force on 1 January 2009.
This Law has been adopted by the Saeima on 14 November
2008.
President V. Zatlers
Rīga, 28 November 2008
1 The Parliament of the Republic of
Latvia
Translation © 2009 Tulkošanas un terminoloģijas
centrs (Translation and Terminology Centre)
