Budget, Financial Services, Latvia, Legislation, Markets and Companies

The Foreign Ministry's budget for 2016 was originally planned at EUR 20.2 million, but the government agreed yesterday that it would be reduced 3% or EUR 605,973. The Economy Ministry's expenditure, EUR 7.9 million, will be reduced by EUR 237,269, the Finance Ministry's budget of EUR 36.3 million will be cut EUR 1,088,997, and the Education and Science Ministry's expenditure of EUR 779,668 will be reduced by EUR 23,390.

The Agriculture Ministry's budget of EUR 20.5 million will be reduced EUR 615,742, the Transport Ministry's EUR 211.3 million budget will be cut EUR 6.34 million, the Welfare Ministry's EUR 5.2 million budget will be reduced EUR 158,255, whereas the ministry's special budget of EUR 4.1 million will be reduced EUR 122,940.

The Justice Ministry's budget of EUR 8.2 million was cut EUR 254,213, the Environmental Protection and Regional Development Ministry's budget of EUR 19.7 million – EUR 592,132, the Culture Ministry's EUR 55.4 million budget – EUR 1.66 million, and the Health Ministry's budget of EUR 18.9 million – EUR 568,566.

The budget of the Cabinet of Ministers, EUR 1.6 million, will be reduced EUR 48,626 next year. The budgets of the Corruption Prevention Bureau, Society Integration Fund, Inter-Ministerial Coordination Center, Central Election Commission will also be reduced.

Government ministers yesterday also reached agreement on additional funding for national defense. Defense spending next year will be 1.4% of gross domestic product in 2016, 1.7% in 2017 and 2% in 2018.

According to recommendations by the government's social partners, it was decided to tighten the criteria on taxpayers' dependants, which entitle the taxpayer to tax breaks.

The Cabinet of Ministers also reviewed ministries' requests for additional funding for priority projects, and agreed that the total funding for such projects would be EUR 116.2 million in 2016, EUR 161.3 million in 2017 and EUR 206.9 million in 2018.

According to the government's agreement, the Defense Ministry will receive extra funding of EUR 55.72 million next year, Interior Ministry – EUR 35.66 million, Health Ministry – EUR 12 million, Transport Ministry – EUR 4.1 million, Justice Ministry – EUR 3.7 million, Welfare Ministry – EUR 1.75 million, Culture Ministry – EUR 1.17 million. Additional funds will also be allotted for other ministries and government institutions' urgent projects.

Finance Minister Janis Reirs suggested to increase minimum income that is exempt from personal income tax by EUR 10 next year. Therefore the monthly non-taxable minimum could be EUR 85 in 2016. It was also suggested to increase the minimum monthly wage from EUR 360 to EUR 380, and the government will discuss these proposals with the social partners.

Likewise, discussions about differentiating the non-taxable minimum and introducing progressive personal income tax system from 2016 will continue.

Previously the government agreed that the deficit in the 2016 state budget must not exceed 1% of GDP. According to the government's projections, Latvia's economic growth in 2015 will be 2.1% and in 2016 – 3%. Annual GDP growth in 2017 and 2018 is expected at 3.6%.

The government's next meeting on the 2016 budget will be on August 31.