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Vilks: budget deficit should be reduced to 5% of GDP

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Baltic news, News from Latvia, BNN.LV, BNN-NEWS.COM, BNN-NEWS.RU,Andris Vilks

The Finance Minister Andris Vilks

This year Latvia will continue to take steps to reduce the state budget deficit to 5% of the gross domestic product (GDP), the Finance Minister Andris Vilks indicated in Euromoney Central and Eastern Europe Conference in Vienna.

He stressed Latvia will implement measures to strengthen its fiscal discipline, and confirmed the state is already working on the structural reform plan, serving as the basis for further consolidation measures in budget deficit reduction from the currently intended 5.5% to 5% of GDP; thus, facilitating the future consolidation measures, so that Latvia could join the eurozone in 2014.

Vilks admitted – the longer it takes to carry out budget consolidation, the harder it is to find appropriate measures. Yet the Finance Minister highlighted in such a severe crisis as the one stricken Latvia, important and sometimes dramatic decisions had to be made to ensure fiscal discipline; however, it is not always possible to present these decisions to the society and business sector successfully.

The Minister repeatedly emphasized the anticipated budget consolidation measures will be based on structural reforms also requiring the public support.

According to Vilks, the already implemented budget consolidation measures form about 16% of the state’s GDP, half of which were done at the expense of expenditure cuts.

At the same time, Vilks also underlined Latvia is now recovering from the crisis successfully, due to important decisions ensuring its return back on growth track.

The Minister pointed out the Latvian economic recovery is tied to export, which has regained its competitiveness during the period of crisis by growing significantly.

The Bank of Latvia President Ilmārs Rimšēvičs also emphasized export is the key sector pulling the country out of the recession. Latvian producers have regained their competitiveness and managed to increase market shares in external markets, which means the chosen path is correct.

In line with the adopted 2011 budget, this year the consolidated budget revenues are planned to form 5.1 billion lats, while expenditure – 5.7 billion lats. According to the international ESA methodology, the budget deficit in 2011 will comprise 5.5% of GDP.

While in 2011 the state consolidated budget revenues are scheduled at the extent of 4 204 253 331 lats, but expenditure –  4 788 439 474 lats, forming a deficit of 4.5% of GDP.


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  1. Lady says:

    It’s easy to say – should be reduced, we all know that.

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