Budget, Financial Services, Latvia

The meeting of the council on Wednesday dealt with the budget drafting process and tax measures planned by the government. Latvia's 2021 budget is being drafted, taking into consideration existing uncertainties and risks caused by the Covid-19 pandemic and its impact on the economy. 

According to information provided at the meeting, it has been proposed to earmark additional EUR 183 mln for the health sector in the 2021 budget to ensure the pay rises promised to healthcare employlees in line with the healthcare financing law. 

Under the current budget proposals, additional EUR 33.3 mln would be allocated to the education sector in 2021 and EUR 49.1 mln in following years for raising teachers' salaries in preschools, comprehensive schools, vocational and extracurricular education. Also, additional EUR 7.2 mln would be provided to raise salaries for academic staff in universities and colleges. 

Implementing the Constitutional Court's rulings in the sphere of welfare will take EUR 95.7 mln. The financing is necessary to raise minimum pensions, social security benefits, guaranteed minimum income and housing benefits, as well as to increase social support to orphans and children left without parental care. For these purposes, financing has been provided both in the central government budget and local governments' budgets. 

Meanwhile, EUR 19.4 mln are needed for activities planned by independent institutions, including public service media which are planning to exit the advertising market. 

As reported, although talks on the 2021 state budget are still continuing, agreement has already been reached on earmarking EUR 338.6 mln for increasing healthcare workers and teachers' salaries and implementation of the Constitutional Court rulings on minimum pension and benefits, according to the Finance Ministry's information.

The final decision on financing for these purposes will be made by the Cabinet of Ministers.

According to the Finance Ministry's data, EUR 183 mln will be needed for increasing healthcare workers' salaries by 20% next year and in subsequent years.

EUR 33.3 mln has been set aside in the 2021 budget for increasing teachers' salaries and EUR 7.22 mln for increasing university and college faculty members' salaries.

In addition, EUR 95.7 mln has been earmarked in the 2021 budget for implementation of the Constitutional Court's rulings: EUR 70.7 mln for increasing the minimum pension and state social security benefit, EUR 23.8 mln in municipal budgets to finance guaranteed minimum income and housing benefit, and EUR 1.3 mln in municipal budgets for orphans' social guarantees.

EUR 19.4 mln has also been earmarked in the 2021 state budget for independent institutions' priorities, of which EUR 8.91 mln will go to finance public media's exit from the advertising market.

As reported, the state budget's base expenditure in 2021 is projected at EUR 7.43 bn, according to the Finance Ministry's report on the state budget in 2021, 2022 and 2023, which the government reviewed in August.