RIGA, May 22 (LETA) - The Ministry of Finance has commented on the decision of the Rezekne City Council to submit an application for termination of the financial stabilization process in the municipality of Rezekne, LETA was told.

The ministry informed that the certified auditor's opinion on the 2025 annual report indicates a material circumstance related to the ability of the Rezekne municipality to ensure continuity of operations. The auditor has found that the municipality's current liabilities significantly exceed its current assets, which indicates insufficient liquidity and poses risks to the municipality's financial stability.

Therefore, when assessing the documents submitted by the municipality, the stabilization commission will pay special attention to the municipality's ability to ensure sustainable financial stability in the medium term.

In order to initiate the termination of the financial stabilization process of a municipality, the municipality must submit to the stabilization commission an application for termination of the financial stabilization process and a decision of the city council on termination of the financial stabilization process, specifying the grounds for termination of the process.

The justification must certify that the accounting function has been centralized, the budgetary and financial management and control processes have been improved during the financial stabilization process, payments to creditors have not been in arrears for more than 30 days in the last 12 months and the municipality will ensure the performance of its autonomous functions and financial stability in the medium term.

The council must also have an approved budget for the current year in which tax and non-tax revenue, as well as a grant from the Local Government Equalization Fund, cover the maintenance expenditure financed from the municipal budget.

Upon receipt of these documents, the stabilization commission will examine them at a meeting in accordance with the procedure laid down in the regulatory enactments.

The process of stabilization of the municipality's finances is terminated by a decision of the Cabinet of Ministers.

As reported, Rezekne City Council will apply for the termination of the municipality's financial stabilization process, the city council decided on Friday.

Rezekne Mayor Janis Tutins (Together for Latvia/Latvia First), explained that the municipality had fulfilled the requirements of the stabilization commission and the Ministry of Finance. He stated that the municipality has a balanced budget, there are no arrears for services received, no interest and loan arrears.

The municipality has also fulfilled other conditions, such as centralized accounting.

The decision to terminate the stabilization process should be examined by the standing commission for the stabilization of local government finances and approved by the Cabinet of Ministers.

As reported, Rezekne municipality entered the financial stabilization process because the municipality's budget did not include funding to meet its obligations, including the payment of employees' salaries.

The Finance Ministry explained that the municipality was in serious financial difficulties and could not balance its budget without an additional state budget loan. The stabilization process and monitoring arrangements are being carried out in line with the requirements laid down in the regulatory enactments, ensuring the performance of autonomous functions, including the availability of services to Rezekne residents and timely settlements with contractors.