Budget, Economics, Financial Services, Latvia, Legislation

According to the Finance Ministry, the general government budget deficit in 2014-2016 will not exceed the maximum level provided in the convergence program, that is, the deficit, calculated in accordance with the European system of national and regional accounts, is projected at 0.9% of gross domestic product in 2014 and 2015, and 0.8% of GDP in 2016.

The medium-term budget framework is based on the following GDP growth forecasts: 3.7% in 2014, 4% in 2015, 4.1% in 2016, 4.1% in 2017 and 3.9% in 2018.

GDP, in actual prices, is projected at EUR 24.764 billion (LVL 17.4 billion) next year, EUR 26.392 billion (LVL 18.55 billion) in 2015 and EUR 28.136 billion (LVL 19.77 billion) in 2016.

The bill also lays down several principles to be observed in the structuring of annual budget bills and medium-term budget framework. The general government budget must be balanced over the economic cycle, ensuring sustainable fiscal policy planning and thereby macroeconomic stability. The budget has to be aimed at fostering sustainable and balanced economic development, providing funds for various sectors within the budget possibilities. Labor tax burden is to be revised so as to reduce income inequality and improve quality of life, especially for families with children.

During work on the medium-term budget framework in the coming years, the government must ensure, taking into consideration the economic situation and budget possibilities, that Latvia's defense spending increases to 2% of GDP by 2020.

The medium-term budget framework provides maximum state budget spending amounts in 2014, 2015 and 2016, as well as budget revenue projections for 2014, 2015 and 2016.

A number of new policy initiatives listed in the 2014-2016 medium-term budget framework include increasing salaries for healthcare workers and teachers. Funds will also be allotted for ensuring remuneration, based on uniform principles, at the Latvian Prison Administration of the Ministry of Justice, as well as renewing full-time jobs for employees in the culture sector. The medium-term budget framework for 2014-2016 also envisages funds for the development of culture, increasing funding for science and for the electronic mass media's work.