Budget, EU – Baltic States, Financial Services, Latvia, Legislation, Pensioners

If the government approves the Welfare Ministry's amendments, it must have a clear vision of what spending items will be cut, and by how much, notes the Finance Ministry.

Increasing pensions is very important to improve pensioners' financial situation and well-being. However, the amendments to the 2016 budget, proposed by the Welfare Ministry, mean that funding which already has been approved for other sectors, for instance, teachers, medical personnel, police officers and other budget-funded institutions, will be impossible to provide. It is unacceptable that the Welfare Ministry has proposed the amendments without taking into consideration the structuring of the 2016 state budget, which is unfair to all other sectors, emphasizes the Finance Ministry.

A decision like this, which will have a significant impact on the budget deficit, must not be considered outside the context of the 2016 state budget. It may only be decided once it is clear where the funding for the reform will come from, believes the Finance Ministry.

Although there is a slight surplus in the social budget at the moment, it was accumulated because the additional payments to pensioners were paid from the master budget. If they were provided from the special budget's revenues, there would be a deficit of EUR 31.7 million in the social budget in 2016.

Already now, before the Welfare Ministry's amendments, it is clear that the 2016 budget will have to be consolidated by 0.3% of GDP. The Welfare Ministry's amendments will further increase budget spending by about 0.1% of GDP. As a result, all other areas may expect spending cuts, notes the Finance Ministry.

Therefore the Finance Ministry is urging the government to act responsibly and support only those amendments suggested by the Welfare Ministry that are necessary for the implementation of the Constitutional Court's verdict and will have neutral fiscal effect on the budget. All the other initiatives of the Welfare Ministry included in the amendments are to be considered when the structuring of the 2016 state budget begins.

As reported, the Welfare Ministry's amendments to the Law on State Pensions will be reviewed by the government today.