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Latvia’s experience in public debt management, public debt auditing and the possibility of applying these practices in the first such audit of the Accounting Chamber were discussed at a seminar for auditors and government officials held by experts from EU Technical Assistance Project “Extension of Public Finance Management Support Programme for Ukraine” (EU4PFM) (hereinafter - the Project).
As a reminder, the compliance audit on public debt management is included in the Accounting Chamber’s Work plan for 2025. It is expected that the report on this audit will be considered in November. The auditee is the Ministry of Finance.
During the meeting, Team Leader of the Project Inguna Sudraba noted that Latvian experts are providing advisory support to the auditors of the Accounting Chamber involved in this audit. The workshop will enable all stakeholders to establish a basis for comparison with international public debt management practices. Representatives of the Latvian State Treasury, the Accounting Chamber of Ukraine, the Secretariat of the Budget Committee of the Verkhovna Rada of Ukraine, the Ministry of Finance of Ukraine and the State Treasury Service of Ukraine took part in the event.
The Chairwoman of the Accounting Chamber, Olha Pishchanska, noted that Ukraine is facing unprecedented financial challenges due to russia’s full-scale aggression, which has led to an increase in public debt to 98.8% of expected VAT in 2024, which stood at around UAH 6.7 trillion at the end of last year.
Olha Pishchanska noted, that according to the results of the debt sustainability analysis carried out under the IMF’s Extended Fund Facility programme, Ukraine’s public debt is unsustainable, and the challenges will continue to grow given the ongoing war and pressure on the financial system.
“The financial stability of the entire state directly depends on how deeply we are able to analyse the situation regarding public debt management and, accordingly, to make the most effective and useful recommendations, how we will cooperate with the audited entity to implement these recommendations, so that the country can manage public debt more efficiently,” Olha Pishchanska summed up.
During the seminar, the participants discussed, among other things, the role and responsibilities of the State Treasury of the Republic of Latvia in public debt management, the process of managing public debt and funds in Latvia (including legal framework, organisational structure, strategy, goals and objectives), the experience with digitalisation of public debt management and its importance for improving the efficiency of this process, as well as the main principles, regulations and methods of accounting and reporting in the context of public debt management.
After the meeting, Vasyl Nevidomyi thanked his colleagues from Latvia and noted that the experience of the Latvian State Treasury, particularу in the areas of regulatory support, decision-making, principles of effective financial management, financial risk management, etc., can be used as an example of best practice for implementation in Ukraine, and therefore can be taken into account by our auditors in the process of developing the questions and criteria for the relevant audit:
“We started our review with the key question - how public debt management processes are currently designed. At the same time, we are gaining new experience with our international partners. Together with the audited entity, we want to help improve this process to navigate through this extremely difficult period,” said Vasyl Nevidomyi.
For reference. In recent years, Latvia has achieved good results in public finance management, in particular public debt management. The ratio of public debt to VAT in Latvia was 45% at the end of 2023. This is well below the European Union average.
