The large number of local governments ina sparsely populated country such as Latvia, calls for theconsolidation of these local governments, which is what theGovernment is now attempting to implement. This will requirereforms to achieve improvements in local services, to changethe basis for financing teachers' salaries, or torationalize the allocation of hospital funding, among manyothers. Additionally, to meet the European Union standardsfor solid waste management, water supply, sanitation, andwastewater treatment, the Government will have to establishinter-municipal, or regional institutions to meetoperational requirements, as well as a regulatory frameworkthat increases water tariffs and improves operations. Infinancing social assistance, the Government may need tofurther finance areas where poverty incidence is unusuallyhigh. The report also addresses the new changes in theorganization, and functions of intermediate levels ofgovernment, suggesting the Government could considerassigning functions, such as the organization of publictransport, the management of roads funds, or other publicservices, to a larger unit of sub-national government. Thefive recently created planning regions, might be anappropriate basis for such level of government.
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