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Wednesday 20.06.2018 | Name days: Rasa, Rasma, Maira

FM: next year’s budget benefits to be felt by everyone – residents, businesses and municipalities

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Baltic news, News from Latvia, BNN.LV, BNN-NEWS.COM, BNN-NEWS.RU«The Cabinet of Ministers has developed the project of the 2015 budget having set as priorities the country’s social and national security, long-tern economic growth and improvement of business competitiveness,» – as the Latvian Finance Minister Janis Reirs commented on the country’s budget plan.

Finance Ministry promises that everyone will feel the benefits of the next year’s budget – residents, businessmen and municipalities.

Reirs adds that the government pays special attention to previously initiated tasks. With that, the minimum wage in Latvia will be increased from EUR 320 to EUR 360 on January 1st, 2015. This measure is aimed to improve income equality of the country’s population, improve the quality of life for poor residents and reduce shadow economy.

The next year’s state consolidated budget revenue is planned at EUR 7.3 billion. The budget expenses are planned at EUR 7.5 billion. Budget deficit is planned at 0.9% of GDP. The revenue of the state consolidated budget’s revenue is planned at EUR 8.9 billion and expenses are planned at EUR 9.2 billion.

The general state budget deficit is predicted to be EUR 247.6 million (1% of GDP) in accordance with European System of National and Regional Accounts for 2015.

The Finance Ministry plans that the general budget deficit of 2015-2017 will not exceed the allowed deficit level: 1% of GDP in 2015; 0.9% in 2016 and 0.7% in 2017.

In accordance with the medium-term macroeconomic development and fiscal policy for 2015-2017, next year’s economic growth is planned at 2.8% in 2015, 3.3% in 2016 and 3.6% in 2017. However, even considering the uncertainty in the economic environment, macro-economic risks have become lower.

Economic development will be directly dependent on changes in the external environment and geopolitical risks. If Russia decides to introduce additional sanctions that will affect Latvia’s national economy, growth may become slower than expected. If oil prices and Russian rouble value continue to decline, it will have a negative effect on completion of economic projections.

Compared with 2014, Latvia’s consolidated budget expenses will increase by nearly EUR 283.3 million.

«Considering the complicated geopolitical situation created by the Russian-Ukrainian conflict and the growing need for security in Europe, Latvia’s government provides special attention to our country’s external and internal security. This is why the next year budget will be our country’s social and national security budget,» – explains Reirs.

It is planned to increase funding for Defence Ministry’s basic functions by EUR 37.9 million. This is aimed to significantly strengthen the capacity of Latvia’s army and the National Guard, as well as create rapid response units. The Interior Ministry is planned to be provided with an additional amount of EUR 21.5 million.

«The government has created an opportunity to increase revenue of the next year’s budget by approving consequent measures to combat shadow economy and securing the promise once given to entrepreneurs regarding the reduction of labour tax. This is why it has been decided to reduce PIT from 24% to 23% on January 1st, 2015. Latvia is one of the rare European countries that reduces taxes, thereby contributing to the strengthening of competitiveness of Baltic States and the whole of the EU region,» – mentions FM in its report.

As for the fiscal policy, Latvia’s course has not changed and it is still planned to focus on securing long-term economic growth and responsible fiscal policy.

The government also plans to focus on matters of social security. This is why it is planned to allocate additional funds for the country’s healthcare system. Healthcare Ministry’s funding is planned to be increased by EUR 31.1 million in order to provide better availability of healthcare services in different regions, reduce queues and fees. It is also planned to increase wages of medical personnel.

In regard to improving the quality of education in Latvia, it is planned to increase the country’s education budget by EUR 31.4 million. The government has also reserved an additional EUR 3 million to help increase wages of teachers starting September 3rd, 2015. Additional funds have are planned to be used to contribute to the development of scientific activities in universities.

FM notes that the government has created an opportunity to increase funding for Transport Ministry, allocating an additional amount of EUR 32.6 million. This funding is intended for the maintenance and restoration of national roads and state grants in order to ensure affordable public transport services to Latvian residents.

The government also plans to provide Agriculture Ministry with an additional funding of EUR 33 million in order to secure additional direct payments to farmers in 2015.


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