Therefore, more efficient steps to prevent the decline of the state economy were required. In accordance with the Declaration of the Intended Activities of the Cabinet of Ministers issued on 11 March 2009, the government has undertaken to achieve reduction of the budget deficit. The need for such a reduction followed both from the commitments to the European Commission and IMF as well as from determination to stop the economic recession in the country. The sharp decline in economic activity caused the considerable decline in the state budget revenues as well. Therefore a substantial reduction of expenditure in the budgets of ministries and central state institutions was planned in the Law Amendments to the Law On State Budget 2009 – in order to achieve budget consolidation for the amount of 500 million lats. The Disbursement Law has been prepared in view of the situation in the State budget. The above budget consolidation measures are based on the agreement signed by the political parties constituting the government , the Free Trade Union Confederation of Latvia, the Employer’s Confederation of Latvia, the Latvian Association of Local and Regional Governments, the Latvian Chamber of Commerce and Industry and Latvian Pensioners’ Federation on 11 June 2009 (hereinafter – the Agreement of 11 June). The Saeima pointed out that the principle of operation of the social insurance special budget is self-financing, namely, the legislative acts regulating social insurance envisage a close link between social insurance contributions and social insurance services. Pensions and allowances are a part of social insurance services and are offered to their recipients from social insurance contributions made by those currently employed. It is emphasized in the replies that the special budget expenditures had been constantly increasing due to the rapid increase in wages during the previous years. As a result, the amount of pensions and allowances had increased alongside with the number of individual service users. Although the positive balance of the social budget on 1 January 2009 was LVL 951.1 million, it decreased to LVL 153.5 million by 1 August 2009. Therefore, if the impugned provisions were not adopted, considering the fulfillment of the social insurance special budget and revenues forecast as well as 8