On Tuesday, the 5th of December, Saeima’s Budget and Finance Committee approved the legislative draft On State Budget for 2024 and budget content for 2024, 2025 and 2026 for the final reading.
The Saeima plans to review the budget on Thursday, the 7th of December.
According to the budget plan supported by the government in November, the budget plan for 2024 provides for budget revenue of EUR 14.486 billion and budget expenditures of EUR 16.212 billion.
The government’s general revenue for next year was initially planned at EUR 17.8 billion, whereas expenditures were planned at EUR 19.1 billion. The government budget deficit in 2024 is planned to reach EUR 1.3 billion or 2.8% of GDP.
Budget deficit for 2025 is planned at 2.3% of GDP and budget deficit for 2026 is planned at 0.9% of GDP.
The state debt for 2024 is planned at EUR 18.6 billion or 41% of GDP.
Domestic and external security, education and healthcare are set as the main budget priorities.
Compared to the state budget of 2023, the planned budget revenue for 2024 is planned to be EUR 1.763 billion larger. State budget expenditures are planned to be EUR 1.538 billion larger when compared to 2023.
The base budget’s planned revenue is planned at EUR 10.016 billion, whereas expenditures are planned at EUR 12.148 billion. Revenue of the special budget is planned at EUR 4.761 billion, and expenditures – at EUR 4.356 billion.
During the budget preparation process GDP outlook in actual prices for 2024 was EUR 45.524 billion. For 2025 the GDP outlook is EUR 48.338 billion, and for 2026 it is EUR 51.122 billion. Budget preparation process also used a GDP growth rate outlook of 2.5% for 2024, 2.9% for 2025 and 2.9% for 2026.
The inflation outlook for 2024 is 2.2%. For 2025 it is 2.5%, and for 2026 it is 2.3%.
At a previous government meeting Minister of Finance Arvils Ašeradens mentioned that the tax policy changes included in the 2024 budget plan are minimal and will not increase the tax burden for residents in any significant manner.
During the budget plan’s development the government also respected long-term fiscal discipline – in the coming years the budget’s structural deficit is planned at 0.5% of GDP.
Ašeradens said that this budget is also meant to push Latvia towards increasing defence spending to 3% of GDP in 2027 and 2.5% of GDP to enhance domestic security in 2026.
The minister also mentioned that a significant addition to the 2024 state budget will come from EU funds – EUR 1.659 billion.
Prime Minister Evika Siliņa previously said that the state budget project fro 2024 will be Latvia’s security and longevity budget. She said that security-related topics will remain on the table in the coming years. This is why investments are intended to develop armed forces’ capabilities and capacity when responding to various challenges.
It is also the government’s objective to ensure there are additional investments into healthcare and education, said Siliņa, adding that additional funding for education and healthcare means investments into the country’s longevity. It will mean smaller queues for patients and a more competitive and modern education for Latvian children, who are the ones to shape the country’s future.
“This is why the budget for 2024 was composed with a focus on our main value – Latvian people, who deserve to feel safe, receive appropriate healthcare, as well as receive skills and knowledge appropriate to the demands of the labour market,” said the PM.
Ašeradens stressed that the country’s finances are stable, adding that next year’s budget covers the objective of the economic policy as stated in the government declaration – achieve sustainable GDP growth by growing investment, productivity and exports, as well as increasing exports to 80% of GDP.
The minister previously explained that the development of the state budget plan for 2024 was dictated by existing security matters in the European and Baltic region. This is why the government worked on the next year’s budget plan responsibly and significantly boosted spending on domestic and external security. In order to promote Latvia’s sustainable development during demographic, climate, technological and digital changes, additional funding has been allocated for healthcare services and their quality, teacher remuneration, higher education, including strengthening of natural science and technology (STEM), innovation and science, as well as export support, said the Minister of Finance.
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