Unfortunately, the advantages of unified regulation were not fully implemented for public services regulated on the municipal level. Upon the initiative of the World Bank a research on regulatory reform in Latvia was performed in 2004 which discovered that the regulatory system is fragmented on the municipal level, due to small scale the municipal regulators do not have convincing width and depth of competence, interpretation of legal acts differs in each regulator, and municipal regulatory system causes additional costs for the society.

The discovered problems of the two-tier regulation and the possible solutions are indicated in the Common Strategy of National Economy which was approved by the Cabinet of Ministers in 2004. This document states that it is necessary to optimize multi-sector public service regulatory model to create favourable conditions for the functioning of the economy and promote competition.

The unified multi-sector public service regulatory model has shown its advantages in Latvian situation, and the improvement of such model must be continued in the interests of service users and service providers. All regulatory functions must be included in a unified regulatory process to implement the principle of regulation unity. The existing fragmentation (even duplication) in implementation of regulatory functions between ministries, regulators and other state institutions must be eliminated. A sufficiently high level of independence of the unified regulator must be secured in the legal system of Latvia.

In the second half of 2004 the Commission participated in the working group formed by the Cabinet of Ministers, together with representatives of sector ministries and Latvian Association of Local and Regional Governments looking for ways to optimize the public service regulatory model.


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