Opinion on the Compliance with the Fiscal Discipline Rules of Municipal Budgets during 2023–2024

The National Audit Office, implementing the function of the fiscal institution (NAO FI), carried out an assessment of compliance with the fiscal discipline rules of municipal budgets. The aim of the assessment is to determine whether the rules have been complied with when approving and implementing municipal budgets.

In 2023, the budgets of all municipalities were found to have been implemented in line with their requirements. The initial budgets adopted by the municipal councils in 2024 were also in line with their requirements. However, the reliability of data continues to be an issue, given that during the assessment it was evident that not all information provided by municipalities is accurate.

Based on the financial statements and not taking into account revisions, the 2024 budgets of five municipalities would have been identified as non-compliant with fiscal discipline rules. Following the submission of revised information by the municipalities on the unused part of revenue and the examination of the budgets approved by their councils, the NAO FI included this information in the assessment. According to the revised data, the budgets of these five municipalities met the requirements. In last year's assessment, there were 14 municipalities which did not comply with the fiscal discipline rules using initial data but complied with them after the revisions.

"The problem of unused part of revenue not being reported or misreported in the financial statements is a recurring one, but this year there are fewer inaccuracies. It is encouraging to see that previous evaluations which have highlighted this and initiatives to inform municipalities about budget and data requirements are helping. Errors in municipalities' financial reporting documents can significantly affect the conclusion on compliance with fiscal discipline rules, so it is important to draw municipalities' attention to the accuracy of the information provided," says Jurga Rukšėnaitė, Head of the Budget Monitoring Department.

As part of the ex-ante evaluation, the NAO FI analysed the initial budgets adopted by the municipal councils, which helps to identify risks of non-compliance with the rules, so that municipalities can adjust their budgets before the end of the year to ensure compliance with the rules.

In the first half of 2025, municipalities' compliance with fiscal discipline rules in 2024 will be assessed.