Management efficiency and financial stability. Colleagues from Latvia shared their experience in managing public debt

Latvia's experience in public debt management, public debt auditing, and the possibility of applying these practices when the Accounting Chamber conducts its first such audit were discussed during a seminar for auditors and government officials by experts from the international technical assistance project "Continuation of the Public Finance Management Support Program in Ukraine (EU4PFM)" (hereinafter referred to as the Project).

As a reminder, the compliance audit on the topic of "Public Debt Management" is included in the Work Plan of the Accounting Chamber for 2025. It is expected that the report on this audit will be considered in November, and the object of control is the Ministry of Finance.

During the meeting, the Project Manager, Inguna Sudraba, noted that Latvian experts provide consulting support to the auditors of the Accounting Chamber involved in this audit. And the mentioned seminar will allow all interested parties to form a basis for comparison with international practices of public debt management. In addition to the Project experts, the event was attended by representatives of the Treasury of Latvia, and from the Ukrainian side - the Accounting Chamber, the Secretariat of the Verkhovna Rada Committee on Budget, the Ministry of Finance of Ukraine and the State Treasury Service of Ukraine.

As reported during the event by the Head of the Accounting Chamber,Olga Pishchanska, due to Russia's full-scale aggression, Ukraine has faced unprecedented financial challenges, as a result of which the public debt indicator has increased to 98.8% of the expected GDP in 2024 and at the end of last year amounted to about 6.7 trillion hryvnias.

Olga Pishchanska noted that according to the results of the debt sustainability analysis conducted within the framework of the International Monetary Fund's Extended Fund Facility program, Ukraine's public debt has been recognized as unsustainable, and given the continuation of the war and pressure on the financial system, – challenges will continue to grow.

«On how deeply we can analyze the situation regarding public debt management and, accordingly, give the most effective and useful recommendations, how we will cooperate with the audit object to implement these recommendations so that the country can better manage public debt, – the financial stability of the entire state directly depends», – summed up Olga Pishchanska.

During the seminar, the participants discussed, in particular, the role and responsibilities of the Treasury of the Republic of Latvia in public debt management, the process of public debt and funds management in Latvia (legal basis, organizational structure, strategy, goals and objectives),the experience of digitalizing public debt management and its significance for increasing the efficiency of this process, the main principles, provisions and methodologies of accounting and reporting in the context of public debt management.

Following the meeting, Vasil Nevyadovy thanked his colleagues from Latvia and noted that the experience of the Latvian Treasury, in particular regarding regulatory and legal support, the construction of the decision-making process, the principles of effective financial management, financial risk management, etc., can be used as an example of best practice for application in Ukraine, so it can be taken into account by our auditors in the process of developing questions and criteria for the relevant audit:

«We started our audit with the key one – with how the processes of public debt management are currently being formed. In parallel, we are gaining new experience with international partners. Working with the audit object, we strive to help improve this process in order to get through this extremely difficult period», – noted Vasil Nevydovy.

For reference. In recent years, Latvia has been able to achieve high results in public finance management, in particular in terms of public debt management. The ratio of public debt to GDP in Latvia at the end of 2023 was 45%. This is significantly below the average level in the European Union.