Budget, Financial Services, Latvia

While debating the budget bills in an online parliament session, lawmakers described next year's budget as "competitiveness budget", "justice budget", "social guarantee budget", "shadow economy budget", "pandemic budget", "stimulation budget", "budget of humane decisions", "budget of desperate decisions", "desperation budget" and "solidarity budget". 

The MPs did not debate each budget-related bill but spoke about the package of budget bills as a whole. Prime Minister Krisjanis Karins (New Unity) and several Cabinet ministers addressed the parliament, outlining their priorities and admitting that none of them is completely satisfied with the draft budget. 

Proposals for the budget bill's second reading in parliament can be submitted by Friday, October 30.

In 2021, consolidated budget revenue is planned at EUR 9.579 bn, down EUR 328 mln from this year. Next year's budget expenditure, meanwhile, is projected at EUR 10.758 bn, which is an increase of EUR 744 mln against this year's budget expenditure.

Revenue in the government basic budget is projected at EUR 6.68 bn and expenditure at EUR 7.84 bn. Revenue in the special budget is planned at EUR 3.15 bn and expenditure at EUR 3.17 bn.

Latvia's GDP forecast (at current prices) for 2021 is EUR 30.02 bn. In 2021, the general government budget deficit can widen to 3.9% of GDP.

Maximum government debt can grow to EUR 14.44 bn and local governments are allowed to increase their loans by a total of EUR 268.12 mln by the end of 2021.

Under the budget bill, 75 % of personal income tax revenue will go to local governments' budgets and 25% to the central government budget. The local governments' share is estimated at EUR 1.34 bn.

Earmarked subsidies to local governments, mostly for teachers' salaries, are planned at EUR 405.08 mln. Government budget subsidies to local governments are planned at EUR 199.34 mln, including EUR 198.68 mln to the financial equalization fund.

According to the draft law on the medium-term budget framework, Latvia's fiscal reserve is planned at 0.1% of GDP for 2021, 2022 and 2023.