«This budget is reasonable and responsible. It will let us realize our main priority – ensure our country’s internal and external security. In spite of challenges presented by the current economic and geopolitical situations, the government has managed to prevent negative fiscal space and find additional resources for priorities. At the same time, we’ve managed to comply with all fiscal discipline requirements,» – said Reirs during the budget plan submission process in the Saeima.
Among priorities is Latvia’s healthcare, which is planned to be provided with additional finances in 2016. A 6% funding increase is also planned for vocational education; 10% increase for science and 18% – for sports. Additional resources will also be allocated for repairs and maintenance of state roads (+8%), as confirmed by Finance Ministry.
According to Reirs, the government has done a lot consider proposals to reduce income inequality and improve the financial situation for residents with low income. Minimum wages and tax-free allowance will grow by EUR 10 next year. A differentiated tax-free allowance will be introduced as well. In order to make tax burden equal for all taxpayers, the government has decided to adopt the so-called Solidarity Tax.
It is important that this budget helps Latvia maintain its position as Europe’s most rapidly growing economy, adds Finance Ministry.
Next year’s consolidated budget revenue is planned at EUR 7.368 billion (EUR 114.215 million more than planned in 2015). Expenses of the 2016 state budget are planned at EUR 7.655 billion (EUR 183.193 million more than previously planned). The allowed budget deficit level is estimated at 1% of GDP.
It is planned that state funding for defence will be at 1.4% of GDP in 2016 and 1.7% of GDP in 2017, reaching a full 2% of GDP in 2018.