Latvian consolidated budget deficit planned at 9.2% of GDP this year
01.06.2009, 14:32
The bill on amendments to the state budget
envisages that consolidated budget deficit this year will reach 9.2 percent of
gross domestic product, including an 8.2 percent deficit in the central
government budget and a 1 percent deficit in the municipal budget, according to
documents that the government is to review today.
The Finance Ministry informed LETA that, taking into consideration the
current economic situation, the deficit in the municipal budget may exceed 1
percent, which is why the budget deficit projections may be altered yet while
the amendments are being reviewed in the parliament.
Prime Minister Valdis Dombrovskis (New Era) told the ministers today that the
current budget amendments will be forwarded to Saeima to be reviewed in the
first reading, and new proposals will be drawn up for the review of the
amendments in the second reading. The scale of these proposals will be
coordinated with the international donors yet.
Continue readingAdvertisement
The bill of amendments informs that Latvia's gross domestic product is
projected to contract 18 percent this year. The latest GDP forecast has been
coordinated by the Finance Ministry with the Bank of Latvia and the Economy
Ministry, and in consultations with private sector analysts and the
International Monetary Fund.
During the work on the amendments, the government ordered a 20 percent
reduction in the spending on salaries in the public sector, and a 40 percent
reduction in all other planned budget expenditures, except for the due payments
into the European Union budget, the Defense Ministry's payments to NATO and the
United Nations, Foreign Ministry's program on payments to international
organizations, expenditures on government debt, and others.
The ministries and other government institutions were ordered to prepare
structural reforms and optimize their structure through mergers, reorganization
or liquidation of a number of government institutions.
Taking into account that the budget amendments envisage steep spending cuts,
the amendments must be passed immediately, so that the ministries and other
government agencies know how much money they will be allotted from the budget
this year, stressed the Finance Ministry.
It is planned that the Defense Ministry's budget will be reduced LVL 30.8
million, the budget of the Finance Ministry will be cut LVL 14 million, Interior
Ministry - LVL 10.4 million, Education and Science Ministry - LVL 22.1 million,
Agriculture Ministry - LVL 20.5 million, Transport Ministry - LVL 109.5 million,
Welfare Ministry - LVL 7.2 million, Justice Ministry - LVL 7.4 million, Culture
Ministry - LVL 15.9 million, Health Ministry - LVL 39.3 million, and Regional
Development and Local Governments Ministry - LVL 10.8
million.