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Monday 25.06.2018 | Name days: Maiga, Milija
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FM: in 19 years surplus will form in the state budget

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Baltic news, News from Latvia, BNN.LV, BNN-NEWS.COM, BNN-NEWS.RUThe general state budget, according to the European Account System methodology, had a surplus last year. According to the current estimate, the budget surplus is expected to be 0.0 – 0.2% of GDP, as reported by Finance Ministry.

Last year’s consolidated budget’s revenue was EUR 9,069.9 million, growing by 2.8%. Tax revenue was EUR 7,419.6 million last year. Their growth is believed to be the main factor for general revenue growth. Compared with 2015, they grew by EUR 416.9 million or 6.0%. 2016 tax revenue plan was completed 100.8%, exceeding expectations by EUR 56.5 million.

Positive effect for tax revenue growth was provided by grey economy combating measures and tax administration improvement measures. The biggest increase of tax revenue came from excise tax and corporate income tax. Excise tax revenue exceeded expectations because of increased consumption of diesel fuel and tobacco products and tax rate increases for products of those groups.

Corporate Income Tax plan’s completion was contributed from increase of fees and reduction of repayment rates. This tax revenue level forms 29.6% of the predicted GDP, which is the highest tax revenue level in recent years, the ministry reports.

Tax revenue was EUR 563 million, which is EUR 63.9 million or 12.8% higher than it was 2015. The state budget’s non-tax revenue plan was completed at 113.3%. A significant portion of the plan came from revenue from illegal finances confiscated from money laundering schemes. According to estimates, this proportion is equal to EUR 46.8 million.

Surplus of the general government budget was also secured by the correction of EU funds in accordance to the amount of funding received from the European Commission. In 2016, EU fund expenditures (without state co-funding) were significantly higher than the funding received from the EC.

According to data from the State Treasury, the 2016 state consolidated budget had a deficit of EUR 101.7 million. At the same time, foreign financial assistance had declined by EUR 254.9 million when compared with 2015. This is likely because of the expected increase of investment flow in the near future.

FM reports that the general budget’s expenditures were EUR 9.17 billion last year. Compared with 2015, they have declined EUR 23.2 million or 0.3%. Lower capital expenditures were also noted in the 2016 budget, declining by EUR 256.4 million or 27.9%. A total of EUR 663.5 million was issued in capital expenditures. This decline is associated with the transition period of EU fund project cycle.

In addition, 2016 also had lower expenditures for interest payments for state debt maintenance, which is mainly tied to the State Treasury’s successful work with maintenance of the state debt and refinancing of commitments.

Similar to last year, a rise was noted in social benefit expenditures and general expenditures, which grew by EUR 114.4 million and EUR 129.9 million (4.4% and 4.1% respectively). The rise of expenditures for social benefits is largely associated with the wage level and the number of benefit recipients in the country, Finance Ministry notes.

Revenue of the state base budget for 2016 was EUR 5.16 billion, which means a 1.4% (EUR 68.8 million) increase in comparison with 2015. The rise in revenue is associated with higher tax revenue. Expenditures were EUR 5,400.8 million. Compared with 2015, it is a 1.4% (EUR 78.6 million) reduction.

Expenditures on goods and services were EUR 31.6 million lower than initially planned. This was largely affected by lower expenditures in Finance Ministry, Economy Ministry, Education and Science Ministry and Environmental Protection and Regional Development Ministry. This helped create some savings in the budget. Payments to the EU budget and international cooperation were EUR 33 million lower than previously planned. This can be explained with EU budget amendments that secured lower fees for member states.

Revenue of the state special budget was EUR 2,338.1 million (up 1.9% or EUR 43.9 million when compared with 2015). The rise in revenue was below the rise of expenditures. Expenditures in 2016 were equal to EUR 2,280.8 million (+4.0% or EUR 87.7 million when compared with 2015).

A smaller surplus formed in the state special budget when compared with 2015. Compared with the surplus that was recorded in 2015 (EUR 91.1 million), it declined to EUR 47.3 million in 2016. The most notable increase in the state special budget was noted for expenditures on unemployment, illness and other benefits, which grew by EUR 61.0 million or 15.7%. Pension expenditure growth was EUR 26.9 million or 1.5%.

Ref: 224.109.109.2941


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