EFFECTIVENESS OF THE FISCAL POLICY IN LATVIA

The economy of Latvia has been under the circumstances of crisis for a longer time. The tax revenues are decreasing in the case of which the necessity arises to decrease the public expenditures but at the same time it creates a serious tension in the society. One of the most important measures to be taken for the development of a sustainable economy in Latvia is to implement an effective fiscal policy. It means a complex and well timed use of fiscal instruments to regulate economy. Evaluating the proposals of the government and the measures taken for the stabilization of economy we can make the conclusion that not always they have been effective and economically justified. Nor can we see a complex approach to the solution of problems. Several rearrangements in the field of planning taxes and budget have been late. The aim of the report is to analyze the state fiscal instrument: the effectiveness of the use of methods planning the state expenditure and budget, to undertake a critical assessment of the fiscal measures taken by the government and to make recommendations for the improvement of the effectiveness of the fiscal policy in Latvia. The tasks of the paper are: to assess the development of the fiscal policy in Latvia; to analyze the influence of the tax changes on the economy; to undertake a critical assessment of the methods for planning the budget; to evaluate the policy of the government expenditures; to make recommendations for the improvement of the effectiveness of the fiscal policy.