The limit on the increase of the compensation fund is applicable to public administration, including municipalities, capital companies financed by the state and municipalities, including classified ones. The government will retain the right to decide on exceptions, for example, on equating the salaries of the employees of the Ministry of the Interior with the salaries of the Ministry of Defense.
Local governments will have the right to set exceptions, if a relevant decision of the city council is adopted, which will justify the exception.
The State Chancellery has been instructed to prepare a proposal for the necessary regulation for inclusion in the 2025 State Budget Law or the package of budget bills.
Minister of Finance Arvils Asheradens (JV) explained at the government meeting that in 2023 the salary in the public sector increased by 15.2% compared to 2022, and in 2024 compared to 2023 – by 14.6%.
Asheraden explained that although the situation in the economy is harsh, these restrictions do not mean the consolidation of government expenditures, but rather their regrouping in order to find funds for financing the 2025 budget priority – security.
Asheraden also emphasized that this restriction essentially provides for the freezing of the salaries of the highest public officials, whose salaries are indexed every year.
Asheraden said that the limit on the increase of the public sector compensation fund will apply to 290,000 public sector workers, but the State Chancellery will have to create a system to deal with it in one department or another.
“Essentially, we are stopping salary increases in the state administration. For elected officials, this is a signal of a salary freeze,” said the finance minister.
Also, the government instructed the State Chancellery to review and prepare proposals for the reduction of positions vacant for a long time (more than 12 months), except for those who are absent for a long time.
For the financing of investments, it is tasked to evaluate the possibilities of carrying them out within the framework of European Union (EU) fund measures, except those directly related to the military field. The proposals of the line ministries will be evaluated by the Ministry of Finance.
It was also decided that in 2025, the total number of positions in the public sector will not be increased, including the limitation applicable to state institutions, municipalities, state and municipal capital companies (including those classified as general government), which are financed from the state and local government budgets. The government reserves the right to decide on exceptions.
In order to provide additional funding for the security priorities applied by the ministries of the sectors, it was decided to support the horizontal reduction of the expenses of the ministries.
The Ministry of Finance explains that in international budget planning practice, the review of previously agreed fiscal limits is also used, including the requirement that the minimum level of savings – the goal of savings – must be determined during the review of expenses. Accordingly, the governments agree on the same lower value of the specified expenditure reduction, for example 1% of the current expenditure, to be achieved by the line ministries.
It is expected that by reducing expenses by 11%, 50 million euros will be saved, by 16% – 75 million euros, and by 22% – 100 million euros. The Ministry of Finance, after updating the base expenses of the state basic budget and the state special budget in accordance with the decisions taken on the results of the expenditure review, will calculate the reduction of expenses for each ministry. Ministries, according to the determined amount of reduction, will distribute the reduced funding by programs, sub-programs and expenditure classification codes.
The reduction will not affect the National Armed Forces and independent institutions. It is true that independent institutions will be invited to provide proposals for reducing expenses.
Also, the government instructed the line ministries to review the increase in funding for individual measures in the state budget bases for 2025, 2026, 2027 and 2028, keeping it at the level of 2024 for the following years.
Ministries have been instructed to submit proposals to the Ministry of Finance regarding a possible reduction in funding for 2025 and beyond, as well as to continue the discussion on compensatory measures (expenditure reduction and revenue increase) in order to ensure additional necessary funding for priority measures.
The government’s discussions on priority measures to be included in the state budget bill will continue, and the final decision is planned for future meetings of the Cabinet of Ministers.
2024-08-28 01:02:32