«The government’s ability to maintain strict fiscal goals has worsened in the past two years. Structural balance results of the 2014 and 2015 budgets were lower than previously expected goals,» – says Chairman of Fiscal Discipline Council Janis Platais.
«Everyone has to understand that half-percentage point or whole percentage point fluctuations can mean failure measured in millions and dozens of millions,» – said Platais at a presentation of the annual report of the Fiscal Discipline Council.
Platais added that it is vital to ensure compliance with fiscal discipline during the period of economic growth, which would ensure economic stability in a long-term perspective. «The current situation raises risks that budget deficit will not allow the government to find additional funds in the budget to pay for immediate needs. In other words, failure to fulfil established goals and existence of budget deficit in 2015 would result in a situation when we will be forced to create a budget with surplus just to reduce pressure on the national debt,» – said Platais.
Head of Monetary Policy Office of the Bank of Latvia Uldis Rutkaste: «Europe’s example proves budget deficit in conditions of economic growth leads to unsustainable national debt, which only slows economic growth. Latvia’s non-deficit budget was only one in the past 20 years. I am certain that fiscal discipline should begin in the best of times to help create a balanced of non-deficit budget. Structural reforms can help Latvia form a non-deficit budget in 2017.»
EC Economic Advisor Martins Zemitis says compliance with budget discipline is important in the whole of EU and Latvia. It is a serious condition for economic growth. «Statistics show that budget deficit levels in European states declines year after year and the general debt burden continues to stabilize,» – said Zemitis, adding that EU member states, including Latvia, have learned a lesson from the financial and economic crises. Nevertheless, the EC economic advisor believes growth and austerity is not enough. «In addition to that, we need to continue reforms that serve to increase the country’s competitiveness and increase attraction of investments. European Commission’s recommendations for Latvia point to important areas where reforms should be carried out: balanced budget policy, reforms in education, social policy and healthcare, as well as state administration and justice sector. Well-planned reforms in line with fiscal discipline provide stable bedrock for future growth,» – said EC economic advisor.