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Latvian budget accumulated surplus of 0.01% of GDP in 2016

Vija Veidemane Government Finances Section, 21.04.2017.Print version
2016, the general government budget surplus accounted for EUR 3.4 mln or 0.01% of the Gross Domestic Product (GDP), whereas the general government consolidated gross debt amounted to EUR 10 038.3 mln or 40.1 % of the GDP, according to the results of the April 2017 Notification on General Government Budget Deficit and Debt1 compiled by the Central Statistical Bureau (CSB), which has been drawn up in line with the methodology of the European System of Accounts (ESA 2010).

Main indicators of the April 2017 Notification on General Government Budget Deficit and Debt


 

2013

2014

2015

2016

 

Budget deficit (-) / surplus (+), mln EUR

  General government

-228.8

-372.6

-305.4

3.4

   Central government

-50.3

-409.6

-422.4

-20.4

   Local governments

-100.2

-51.0

79.9

30.5

   Social security fund

-78.2

88.0

37.1

-6.7

 

General government consolidated gross debt at nominal value at the end of year, mln EUR

8  892.7

9 660.1

8 898.8

10 038.3

Gross domestic product at current prices, mln EUR

22 786.5

23 631.2

24 368.3

25 021.3

 

As % of GDP (deficit (-) / surplus (+))

General government budget deficit (-)

-1.0

-1.6

-1.3

0.01

General government consolidated gross debt at nominal value at the end of year

39.0

40.9

36.5

40.1


In 2016, as compared to 2015, improvements could be observed in the general government sector. Compared to 2015, central government budget deficit in 2016 decreased by EUR 402.0 mln or 1.6 percentage points (ppt) of GDP, and it comprised EUR 20.4 mln. This was facilitated by an increase in tax revenue, as well as adjustments made to all expenses of European Union funds in accordance with the financing received from the European Commission.


The budget surplus of the local government sub-sector accounted for EUR 30.5 mln in 2016, and, compared to 2015, it decreased by EUR 49.3 mln or 0.2 ppt of GDP due to the growth of tax revenue and reduction of expenditures. The budget surplus of the social security fund sub-sector decreased by EUR 43.8 mln or 0.2 ppt of GDP, and a EUR 6.7 mln deficit could be observed due to the growing expenditures on unemployment, sickness and other benefits.


As compared to 2015, the general government consolidated gross debt in 2016 grew by EUR 1.1 bln or 12.8% and accounted for EUR 10 bln. The increase was mainly facilitated by the results of the issuing of long-term debt securities.


General government budget deficit (-) / surplus (+) by subsectors
2013–2016, % of GDP


The provisional cash flow data of the Treasury on 2016 indicated a general government consolidated budget deficit in the amount of 101.7 million euros, whereas the data on the general government sector calculated by CSB in line with the methodology of ESA 2010 indicated a budget surplus.


Most significant methodological adjustments with positive effect on the general government budget:


-       adjustments for balancing foreign financial aid flow (data of institutions involved in administration of foreign funds) – by EUR 123.8 mln or 0.5% of GDP;

-       tax adjustments by using the time adjustment method (data of the Ministry of Finance) – by EUR 41.3 mln or 0.2% of GDP;

-       adjustments of expenditure on construction of the Southern Bridge (data of Riga City Council) – EUR 23.6 mln or 0.1% of GDP;

-       adjustments in claims against debtors (data of the Treasury) - by EUR 18.2 mln or 0.1 % of GDP;

-       adjustments for exclusion of transactions of derived financial instruments (data of the Treasury) – by EUR 11.4 mln or 0.05% of GDP.


At the same time, there have also been adjustments with negative effect on the general government budget:

-       adjustments to obligations against creditors (data of the Treasury) - by EUR 70.6 mln or 0.3 % of GDP;

-       adjustments for future payments of the 2nd pillar pension scheme funds (data of the State Social Insurance Agency) – by EUR 19.4 mln or 0.1 % of GDP;

-       balance of corporate enterprises of central and local governments reclassified to general government (CSB data) – EUR 14.3 mln or 0.1 % of the GDP;

-       adjustments in the use of extra-budgetary funds for the construction of the National Library of Latvia (data of the Treasury) – by EUR 8.9 mln or 0.03 % of the GDP;

-       adjustments for government investments in state and local government enterprises (data of the Treasury) - by EUR 6.2 mln or 0.03 % of GDP.


While carrying out calculations of the April 2017 notification, data of the Ministry of Finance, the Treasury, State Social Insurance Agency, CSB, Riga City Council, Central Finance and Contracting Agency and institutions involved in administration of foreign funds were used.

Eurostat will release information on the results of the April 2017 notification in all EU Member States on 24 April.






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