Ms. Mudite Priede, Secretary General of The Latvian Association of Local and Regional Governments (LALRG), your organisation recently decided to join the Innovation Circle Network, can you explain why you see a benefit in this network for Latvian local and regional governments?

LALRG main objectives are to develop municipal policy in Latvia; to solve municipal problems and to facilitate co-operation among Latvian local governments.

From my previous experience representing Jelgava district council in the IC Network, I would like to stress the importance of the Network in strengthening transnational cooperation and enhancing awareness about cultural diversity, political and religious traditions among local governments. I believe that it is very important to exchange ideas, and to facilitate the sustainable development of local governments and to seek innovative solutions for economic development.

The IC Network brings decision makers, specialists, business people, voluntary workers and youths from different countries together into development projects and events. The role of the LALRG will be to promote the exchange of ideas; to facilitate the involvement of Latvian local governments in common projects as well as to disseminate the information among its members.

Latvia is in a rather difficult economic situation this year according to mass media. Can you tell us how serious the situation is?

Economic situation in Latvia is very complicated, even hard. I will name some economic indicators to illustrate the situation. In 2008 Latvian GDP in constant prices declined by 4.6 percents. This is mainly due to the rapid fall of private consumption, investments and export. In the first half of 2009 the economic situation continued to decline, and the macroeconomic development scenario foresees 18.0% decline of the gross domestic product (GDP) (in comparison to 2008); and in 2010 a 4.0% decline. A small growth of 2 % is forecasted only for 2011.

In the second quarter of 2009 there were 199.7 thousand unemployed or 16.7% of the economically active population (employed and job seekers). In August 2009 the registered unemployment rate rose to 12.2% of the economically active population.

Nine month (2009) fiscal situation, in comparison to the situation in corresponding period of 2008, has declined. In the first 9 months 2008 there was a budget surplus of 135.9 million lats, while in the corresponding period 2009 there was a deficit of   493,7 million lats. The general forecast for 2009 financial deficit is 924.9 million lats or 7.1% of GDP. In 2009 total tax revenues decreased by 25,2%. The total tax revenue forecast for 2010 foresees further reduction of another 9.3% in comparison to the revenues planned for 2009. In the first 9 month of 2009, the total personal income tax revenues were 560,0 million lats, which comparing with the corresponding period in the previous year is for 26,1% lower. Personal income tax is the main source of revenues for local governments. On average, local government budget revenue reduction in 2009 is 30% in comparison to the year 2008.

Latvia has this year introduced a local and regional reform and reduced ?  Can you please tell us the main content of the reform and will you manage to implement it in this financial situation?

In Latvia negotiations about the necessity of administrative territorial reform started already in 1992. In the European context the mentioned reform is one of the most long lasting reforms in Europe. During this period there were designed numerous scenarios of the reform. The last compromise was adopted by the Parliament (Saeima) in the end of 2008.

Before the local government elections there were:

26 district councils and 522 local governments, including:

  • 50 towns and 7 cities
  • 41 amalgamated municipalities
  • 424 rural municipalities

The local government elections, held on 6 June 2009, took place already in the new administrative territories and at this moment there are: 9 cities and 109 municipalities.

The reorganization of districts should be completed until 1 January 2010.

Unfortunately the completion of the administrative territorial reform coincided with the heavy economical situation in Latvia. The new local government councils starting their terms had to make hard decisions on:

1)     on the closure of schools, at the same time ensuring that students can reach other schools;

2)     on establishment of new local government structures and reduction of local government staff;

3)     on preparation of budget amendments, ensuring necessary social assistance (GMI, housing allowances, etc.).

The objective of the administrative territorial reform was to establish administrative territories – local governments that have high economic growth potential, and are capable of providing high quality services to the inhabitants.

Did the reform achieve its objectives? It is too early to make any kind of conclusions regarding the success of the reform.

Just food for thought…before the reform the smallest local government was Kalncepji rural municipality, where the total number of inhabitants was 251. After the reform the smallest municipality in terms of population is Baltinava municipality – 1467, the largest: Ogre municipality with 38 885 inhabitants.