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Tuesday 21.11.2017 | Name days: Andis, Zeltīte

Last year’s budget deficit in Latvia was 1.4% of GDP

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Baltic news, News from Latvia, BNN.LV, BNN-NEWS.COM, BNN-NEWS.RUGeneral government budget deficit at the end of 2014 comprised EUR 347 million or 1.4% of the Gross Domestic Product (GDP). The general government consolidated gross debt comprised EUR 9 633.2 million or 40.0 % of the GDP.

According to operating cash flow data of the Treasury in 2014 consolidated budget deficit was EUR 399.0 million. But budget deficit calculated by the CSB, according to ESA 2010 methodology, is EUR 52.0 million or 0.2% of GDP less, according to data compiled by Central Statistical Bureau.

Most significant adjustments with positive effect on the general government budget (reducing deficit) include: adjustment for balancing foreign financial aid flow (data of institutions involved in administration of foreign funds) – EUR 139.0 million or 0.6% of GDP; adjustments in claims against debtors (data of the Treasury) – by EUR 36.3 million or 0.2% of the GDP; tax adjustment using time adjustment method (information source – calculation of the Ministry of Finance) – by EUR 26.0 million or 0.1% of the GDP; adjustments in accrued contributions in the European Union (EU) budget (data of the Ministry of Finance) – EUR 23.7 million or 0.1% of GDP; adjustments for exclusion of transactions of derived financial instruments (data of the Treasury) – by EUR 22.2 million or 0.1% of the GDP; adjustment of expenditure on construction of the Southern Bridge (data of Riga town council) – EUR 20.8 million or 0.1% of GDP; adjustments for revenues from auctioning of emission allowances granted to Latvia (data of the Treasury) – by EUR 7.3 million or 0.03% of the GDP.

At the same time adjustment with negative effect to the general government budget was done, increasing deficit: a single capital transfer for complying with the obligations towards the European Bank for Reconstruction and Development (EBRD) (data of the Privatisation Agency) – EUR 88.2 million or 0.4% of GDP; adjustments to obligations against creditors (data of the Treasury) – by EUR 51.2 million or 0.2% of the GDP; adjustments in the use of non-budgetary funds for construction of the Latvian National Library (data of the Treasury) – by EUR 28.6 million or 0.1% of the GDP; adjustment of government investment in financial institutions and enterprises (data of the Treasury) – by EUR 16.8 million or 0.1% of the GDP; adjustment of lump sum payments for pension schemes (data of the State Social Insurance Agency) – by EUR 15.1 million or 0.1% of GDP; balance of enterprises of central and local governments reclassified to general government (CSB data) – EUR 14.1 million or 0.1% of the GDP; adjustments to impact of exchange rate fluctuations (data of the Treasury) – by EUR 9.6 million or 0.04% of the GDP.

In 2014 general government budget deficit, compared to 2013, rose by EUR 174.9 million or 0.7% of GDP. Evaluating sub-sectors of general government, it must be concluded that central government budget deficit enlarged significantly. If in 2013 revenues and expenditure of the central government budget were balanced, in 2014 the situation has changed. In 2014 increase of deficit was promoted by a single capital transfer for central government to comply with the obligations towards the EBRD, as well as rise of expenditure for remuneration and social benefits. But reduction of budget deficit has formed in both other general government sub-sectors, especially in sub-sector of social security fund. Starting with 2014, central government had begun financing pension subsidies in transfers, which are paid from social security fund. Reduction of budget deficit of sub-sectors of local governments was affected by rise in enlargement from personal income tax and practically unchanged level of expenditure.

In 2014, general government consolidated gross debt, compared to 2013, increased by EUR 757.3 million or 3.1% of GDP, mainly, due to the emission of two euro obligations to refinance borrowings from the European Commission carried out within the framework of international borrowing programme.


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