Finance Ministry Plans to Limit Non-Essential State Spending Through 2026

Latvia plans to restrict new contract sign-offs and delay non-critical expenditures through the end of 2026 to curb public spending growth. The Ministry of Finance outlined these measures in an informative report submitted to the government following budget discussions held by the Cabinet of Ministers.

Limiting new public service contracts

Ministries and central state institutions must restrict new agreements for goods delivery, consultations, research, and other external services until the end of 2026. New contracts will only proceed if required for the continuous execution of state functions, compliance with regulatory enactments, or the completion of procurement procedures announced by October 1.

State authorities must evaluate the postponement of expenditures not critically necessary for core functions. This impacts seminars, conferences, representation events, consultations, research, professional external services, and the renewal of office equipment, according to the ministry.

Contracts over 50,000 euros require official consent

Any new contract reaching or exceeding 50,000 euros without value-added tax requires the consent of the Prime Minister, the sector minister, or an authorized official. Institutions must assess the utility and budgetary impact of new commitments for both current and future years.

The government will urge independent institutions, state-owned capital companies, universities, municipalities and other public persons to apply similar expenditure restriction principles. The State Audit Office will be asked to evaluate compliance with these limits during the 2026 annual report audit.

Fiscal forecasts and funding rules

The Ministry of Finance plans to update fiscal forecasts by November 10 using the September macroeconomic scenario. Unfunded decisions will be reviewed alongside sector ministries to find coverage within the existing budget or provide for more gradual implementation.

The ministry called for strict adherence to the legal principle allowing new permanent expenditures only when a permanent funding source is secured. Officials also advised against including matters in the government agenda outside the budget preparation process if the ministry issued a negative opinion and no funding source was indicated.