Policy planning and coordination system
In 2000 Latvia started the development and implementation of a uniform policy planning and coordination system. ''Policy Planning Guidelines'', which prescribe the basic principles for the policy development, types of policy planning documents and their hierarchy, was a basis for adoption of Cabinet Regulations No.111 ''Rules of Procedure of the Cabinet of Ministers'' of 12 March 2002.
All policy planning documents have distinct common requirements with regard to their contents – analysis of the current situation, main existing and potential problems, possible alternative solutions and impact assessment, as well as assessment of decision’s impact on the state budget, policy outcomes and outputs expected, correlation with other policy planning documents or legal acts, reporting and control procedures. Since restoration of Latvia’s independence all policy planning documents adopted by the Cabinet have been collected in the ''Database of Policy Planning Documents''.
When forming the system, a special focus was put on development and implementation of policy impact assessment procedures. An integral part of the process was introduction of the annotation mechanism prescribing that an annotation has to be attached to every draft legal act in order to provide a summary on necessity of the draft legal act, its impact on the current situation and on the state budget, conformity with regulatory document of the EU and opinion of the non-governmental sector.
Currently, the Policy Coordination Department of the State Chancellery, in cooperation with other ministries, is working on scenarios for development of the policy planning and coordination system in view of the fact that in 2006 the term of the Policy Planning Guidelines is expiring. Late in 2005 an independent study was conducted on implementation of the Guidelines. It is planned that the ''Guidelines for Development of the Policy Planning System'' will be submitted to the Cabinet of Ministers by autumn 2005 for their approval.
Implementation of the strategic planning system was started in 2004, which is a substantial step towards linkage of the policy planning process and drafting of the state budget. According to the results obtained in a pilot project in the Ministry of Agriculture, ''Methodology Guidelines for Development of Institution Strategic Plan'' was developed.
State and municipal agencies also develop their strategic plans in line with the Law on Public Agencies. Critical importance in implementing the strategic planning system has transition to the medium-term planning system of the state budget which is drafted by the Ministry of Finance.
Amendments to the ''Rules of Procedure of the Cabinet of Ministers'' adopted in 2005 stipulate that the state budget of 2007 should be drafted in accordance with the structure included in the programme part of ministries’ strategic plans. This would ensure integration of sectoral policies used for annual budget application of the respective direct administration institution.
Linkage of policy planning and budget drafting processes
Linkage of state budget planning and action strategies was started by the implementation of the Guidelines for Medium-term Budget Planning adopted by the Cabinet of Ministers on 5 April 2005
When developing the basic principles for policy planning, one the most important requirements was compliance with the feasibility principle by linking policy and budget planning. Primary elements of the linking process are:
Procedure for consideration and acceptance of new policy initiatives,
Institution strategic planning,
Medium-term budget planning.
The procedure for consideration and acceptance of new policy initiatives (NPI) is prescribed by Cabinet Regulations No.111 ''Rules of Procedure of the Cabinet of Ministers'' of 12 March 2002. The main feature of the procedure – NPIs is considered for a year’s time but decisions on allocation of necessary funding are adopted only within budget planning by including the NPIs in the respective list. By the time when planning of the next budget is started, all ministries have to perform assessment of the approved NPI and present them to the Cabinet in a list (in priority sequence).
Medium-term budget planning is a process which involves defining state development priorities, fiscal objectives and strategy, budget objectives, priority lines of development and medium-term state budget expenditure. The primary legal act regulating this process is Cabinet Instruction No.8 ''Procedure for Medium-term Budget Planning'' of 27 August 2002.
Normative acts, instructions and methodology materials prescribing drafting the state budget are published in the Internet homepage of the Ministry of Finance.