In order to find resources for addressing demographic challenges, strengthening security, and supporting education, austerity measures will be necessary, Prime Minister Evika Siliņa (JV) said in an interview with the TV3 programme 900 Seconds.
Siliņa noted that the government had already discussed possible savings measures for the coming year back in June. She explained that budget forecasts are usually received at the beginning of August, and this week the latest estimates of tax revenues and budget execution were received. The Prime Minister stressed that the government is still awaiting analytical material from the Ministry of Finance to objectively assess whether the situation has improved or worsened. Initial evaluations suggest the situation is slightly better than usual, but austerity measures will still be necessary.
She emphasised that reviewing expenditures is valuable as it allows an assessment of how state funds are being used and helps identify more efficient solutions. Siliņa compared this process to managing a family budget, where it is also possible to find smarter ways to allocate resources. Therefore, she plans to meet with ministers to discuss how to implement key plans — demographic measures, education programmes, and strengthening security.
She underlined that these goals have not changed, and their implementation will require additional funding, which should be found within the existing budget rather than through borrowing.
Siliņa acknowledged that emotions run high in society and among various organisations,
with frequent calls to look for budget resources elsewhere. She noted that each sector tends to believe it cannot cut costs, even though large amounts of funding are often concentrated in state-owned enterprises and services. She therefore stressed the need to review the functions and efficiency of public institutions as well.
She added that she does not wish to reduce the range or quality of services available to residents, especially in healthcare, but the state administration will have to find ways to optimise its operations.
Speaking about early retirement pensions, Siliņa said that part of this system is still a legacy from previous political systems. She referred to an analysis conducted by the Saeima, which concluded that the situation varies widely across Europe — in many cases, early retirement pensions are granted as compensation for occupational diseases. At the same time, she stressed that those who currently have the right to an early retirement pension will not lose it. However, she noted that in the future the system will need to be reviewed, as wages have increased significantly in recent years and the early retirement pension budget has grown rapidly.
Siliņa also acknowledged that
new demands keep arising — for example, an emergency situation has been declared for farmers,
and funding is needed for unforeseen circumstances. She noted that climate issues must also be addressed at the European level, and Latvia cannot ignore them. She stressed that the government is ready to tackle all these challenges.
As previously reported, the next year’s state budget will prioritise three areas — defence and security, demography, and education.
It has also been reported that, according to a mandate from the Cabinet of Ministers (CM), the public sector must be made more efficient and general government expenditures reduced by no less than 450 million euros in 2026–2028, including at least 150 million euros in 2026.
The funding obtained through expenditure optimisation and reduction is intended to be allocated primarily to defence and security spending, combining domestic fiscal measures with international loans. In addition, the CM has decided that increases in defence funding will be implemented so that general government debt does not exceed 55% of gross domestic product (GDP).
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