Valka Municipality faces critical financial situation

The Latvian Ministry of Finance has issued a warning regarding the critical financial situation of Valka Municipality, noting that conditions have not significantly improved in 2026.

According to the Ministry, the municipality regularly delays payments, including tax obligations. While the local government continues to negotiate debt repayment schedules with creditors, its submitted cash flow project is deemed not balanced in the long term. The Ministry warns that without strict expenditure optimization, the municipality will be unable to fully settle with creditors this year or continue providing municipal services.

As of August 31, the total amount of delayed payments and outstanding debt obligations reached 620,791 euros. This includes new overdue payments of 240,131 euros, consisting of 117,611 euros in tax debts and 172,725 euros owed to SIA 'Utilitas Valka' for thermal energy. The Ministry noted that negotiating new schedules merely postpones obligations and creates additional budgetary expenses. The municipality has also failed to fulfill tasks set by the Cabinet of Ministers in a May 19 decision.