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Friday 26.05.2017 | Name days: Varis, Eduards, Edvards
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Rimsevics: there is no money left in the budget to afford new initiatives

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Baltic news, News from Latvia, BNN.LV, BNN-NEWS.COM, BNN-NEWS.RUThe state budget does not have money left to finance new initiatives and needs, believes Bank of Latvia Governor Ilmars Rimsevics.

One major matter in the context of Latvia’s development is whether or not Latvia is able to maintain a reasonable budget policy, which is something that helped the country climb out of the crisis. What is equally important is whether or not the country is strong enough to avoid coming back to the policy that had once led the country to the crisis, added Rimsevics.

Work on the development of the next year’s budget is currently at its starting phase, many things could change in the future, said Rimsevics, adding that it is exactly the reason why it is necessary to root out potential risks and carry out steps to avoid risks.

The bank’s governor believes the more recent trends and public statements show that the situation is rather troublesome. There are serious concerns over multiple initiatives that request additional funds from the state budget even though it is clear that there is no money left. «It is the kind of action that creates a dangerous trend and could very much ruin all efforts previously put in to the stabilizing of the country’s macroeconomic situation and fiscal longevity,» – warns Rimsevics.

The expert of the Bank of Latvia believes the recently voiced budget consolidation sum for 2016 is a very conservative estimate and does not include multiple significant factors. It is currently clear that there is no money left in the budget to afford new initiatives, he added.

The current allowed budget deficit level is 1% of GDP (EUR 260 million). During economic growth, the allowed deficit could be 0%. The aforementioned 1% has to include the money planned for initiatives in 2016, which has already been decided upon by the government.

Ref: 102.109.109.6099


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