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Latvia's draft 2017 budget submitted to Saeima amid medics' protest

BC, Riga, 14.10.2016.Print version
inance Minister Dana Reizniece-Ozola (Greens/Farmers) today handed Saeima speaker Inara Murniece (National Alliance) a suitcase with the blueprint of Latvia's 2017 budget inside.

The finance minister carried the suitcase with the draft budget to Saeima without stopping by and talking with approximately 60 medics who were staging a protest, the Carpet of Green Death, outside the ministry.


The protesters had placed a green carpet and several crosses, as well as beds with signs Green Death in front of the Finance Ministry. It appeared that people were lying in the beds under the sheets. A protester dressed up as "Green Death" with a scythe knocked on the ministry's door from time to time.


As she handed the suitcase to speaker Murniece, the finance minister said that additional resources had been sought mostly by tapping into the ministries' own budgets and planning measures aimed at reducing shadow economy.


Dana Reizniece-Ozola thanked the Finance Ministry's team for their work on Latvia's 2017 budget and the medium-term budget framework.


As she received the budget blueprint, Murniece voiced hope that the budget has been worked out under the leadership of a "wise chess player", alluding to Reizniece-Ozola's prowess as a chess grandmaster. She also expressed satisfaction that the budget prioritized areas like security, health care, education and demography.


The Saeima budget committee is due to get to work on the draft 2017 budget next week, October 17, while the first reading of the budget bill in Saeima might take place on October 31.

The government approved Latvia's draft 2017 budget on Thursday, with revenues projected at EUR 8.066 bln and expenditures at EUR 8.367 bln.


As compared to the 2016 budget, revenues are expected to grow by EUR 664 mln and expenditures by EUR 681 mln next year.


A revision of budget expenditures has provided additional EUR 60 mln which will be spent on government initiatives and prioritized measures in various sectors. The government is determined to revise the budget on a regular basis also in the future, the Finance Ministry said.


The revenues and expenditures planned in Latvia's 2017 budget have exceeded the size of pre-crisis budgets, Reizniece-Ozola  said at government meeting.


The minister noted that next year's budget priorities - defense, security, health care and education - will remain high on the government's agenda also in the future. Reizniece-Ozola added that while working on the 2017 budget the government kept its promise not to make major tax adjustments but to ensure budget revenues by tapping into internal reserves and clamping down on shadow economy.


Reizniece-Ozola expects Latvia's GDP to expand by some 2.5% this year and to grow faster, by 3.5%, next year as Latvia absorbs EU funding.


"Next year's GDP growth of 3.5 is nowhere near the 5% growth target written in the national development plan, but if we look at trends in the global economy, 3.5% growth would be one of the best results in Europe," the finance minister said.


Reizniece-Ozola praised the reforms that have been launched in the education system, saying that their benefits will become felt in a couple of years. The reforms planned in health care will be carried out so that the additional funding allocated for this purpose is spent in accordance with the Health Ministry's plan, which has to ready by the end of this year.


Starting in 2017, Latvia is planning to set aside a fiscal reserve of roughly EUR 26.4 mln, or 0.1% of GDP. "The fiscal reserve will keep us from spending all the money we have in our pocket and to save a small reserve for contingency purposes," she said.


"Overall, next year's budget revenues and expenditures have exceeded the pre-crisis level. We must keep in mind, however, that we borrowed in international financial markets during the crisis and that we will have to repay these loans and interest in following years, which will make up a large portion of budget expenditures," the minister said.






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