Privatisation in Latvia was launched in 1991. Although it was already admitted in 2003 that the goal of privatization is basically reached and one plans to complete the privatization process by 2010, and the State Audit Office has paid attention to the Ministry of Economics and the Privatization Agency by providing recommendations for predictable and cost-efficient completion of the privatization process during the expediency audit in 2016, final deadline has not been fixed yet.
The Ministry of Economics and the Privatization Agency initially undertook to implement the recommendations of the State Audit Office regarding the determination of the deadline by 2 January 2018. However, without obtaining sufficient assurance from the Ministry of Economics about the implementation of the recommendations, the State Audit Office took a decision to evaluate the implementation of the four recommendations related to the completion of the privatisation process and the use of privatisation vouchers during the 2018 financial audit of the Ministry of Economics.
During the audit, the State Audit Office has concluded that there is still a lack of a clear plan for the predictable and cost-efficient completion of privatisation and the use of privatisation vouchers in the country.
The draft laws reviewed by the Cabinet of Ministers on 21 November 2018 and submitted to the Saeima also do not include provisions that would set deadlines for the completion of the privatisation process and the use of privatisation vouchers. Moreover, those draft laws are still pending before the Saeima, and they have not been adopted yet.
The risk that the lasting indecision on the completion of the privatisation process would cause additional spending for the state budget in the future, which had already been predicted in the expediency audit in 2016, has materialised.
Fulfilment of public administration functions delegated to the Privatization Agency, including the completion of the privatisation process, requires additional financing of 0.9 million euro in 2019 and 1.3 million euro in 2020. From that amount of financing, the accounting and settlement system of privatisation vouchers will require an additional 381 thousand euro in 2019 and already 471 thousand euro in 2020.
The number of unused privatisation vouchers was 2.3 million as of the end of 2018, and their number has decreased by only 12% compared to 2014. As no decisions have been made on the deadlines for the completion of the privatization process and the use of privatisation vouchers, the additional amount of state budget funding required to complete privatisation process in the long term is not predictable.
The State Audit Office considers that the Ministry of Economics should re-evaluate the activities to be carried out for the purpose of completing privatization process and the use of privatization vouchers and submit proposals when deciding on funding for the operation of the Privatization Agency which would enable the government to decide on the cost-efficient and time-terminated completion of privatization process and the use of privatization vouchers.