Budget, Economics, EU – Baltic States, Financial Services, Latvia, Loan

Valdis Dombrovskis.

At the same time, Dombrovskis admits that fiscal stabilization measures within the framework of the agreement with the international lenders have been very severe, writes LETA.

The state consolidated budget deficit in 2009, calculating according to the cash flow principle, was LVL 892.1 million or 6.7% of gross domestic product. If calculated according to the reserve principle, which is used in Maastricht criteria and is the one that the international lenders look at, the deficit was 8% to 9% of GDP.

In the report to parliament, Dombrovskis informs that the 2009 budget amendments and 2010 state budget achieved budget consolidation of almost LVL 1 billion, in line with Latvia's obligations to reduce budget deficit to 8.5% in 2010.

The government is also aware of the budget ceiling in 2011 and 2012, which will make it possible for Latvia to attain one of its strategic priorities – join the eurozone.

Precise data on the state consolidated budget deficit last year will be made public on April 1 this year.

As reported, Dombrovskis' Cabinet was approved by a Saeima vote on March 12, 2009, at the time when the economic crisis and the country's solvency problems had become a reality.

Latvia will have to reduce budget spending by LVL 800-900 million the next two years to achieve a budget deficit of less than 3% of GDP, so that Latvia would meet Maastricht criteria for adopting the euro.