This public expenditure review (PER) wasconducted at the request of the Ministry of Finance (MoF) onbehalf of the Government of the Republic of Latvia. Theobjective of the PER is to identify potential areas offurther budget savings in public administration and thesocial sectors that could help restore fiscal balance, speedLatvia's recovery from the current crisis, and help itto meet the Maastricht Criteria by 2012 so it can adopt theEuro in 2014. The remainder of this volume is structured inthe following way. Section two recounts the events andcircumstances that set the Government's fiscal stancein the years prior to the crisis. Section three summarizesthe principal emergency measures the Government took to copeduring 2008 and 2009 as the crisis broke and led toLatvia's severe economic contraction. The purpose ofthese sections which draw liberally from material preparedby the financial authorities, the International MonetaryFund (IMF) and the European Central (EC) is to make the casefor further fiscal adjustment plain. The report thensummarizes the main messages and highlights the mostimportant suggestions made in each of the longer, moredetailed chapters of volume two of the review. Each sectionis followed by a matrix of the options presented for theGovernment to take into consideration. Given the importantrole that municipalities and republican cities play in thedelivery of social services, the chapter three of volume twoprovides an in depth examination of local governmentfinances and spending. Local authorities (municipalities andrepublican cities) play such a prominent role in thedelivery of public services particularly social servicesthat a close look at the character of their spending is critical.