After two days of debates, the Saeima on Thursday supported next year’s state budget and the accompanying package of draft laws in the first reading during an extraordinary sitting.
A total of 51 members of parliament voted in favour of the State Budget for 2026 and the budgetary framework for 2026, 2027 and 2028, while 45 voted against it.
Members of parliament began the first reading of the budget at 10:00 on 5 November. On the first day, MPs debated until 19:00. On the second day, the Saeima resumed work at 9:00 and concluded it before 14:00. In total, including breaks, MPs spent almost 14 hours discussing next year’s budget.
Both opposition and coalition MPs took the floor during the extraordinary sitting. Coalition MPs emphasised investments in security in next year’s budget, highlighting increased funding for the defence sector. Support for education and families was also underlined. Meanwhile, the opposition most frequently criticised the budget for its large deficit and “living on borrowed money”.
Government ministers also used the opportunity to speak during the extraordinary sitting,
outlining the issues to be addressed next year and work already undertaken.
Opposition MPs pledged to submit proposals to reduce next year’s budget expenditure.
The draft law “On the State Budget for 2026 and the Budgetary Framework for 2026, 2027 and 2028” is accompanied by 50 related draft laws, including amendments to certain taxes and a reform of the service pension system.
The Saeima in the first reading supported government-prepared amendments to the Excise Tax Law, which provide for a gradual increase in excise duty on several product groups from next year, including alcoholic beverages, tobacco products, and non-alcoholic and energy drinks. In turn, in two years’ time it is planned to abolish the reduced rate for oil products used in free ports and special economic zones.
From 15 March next year, excise duty on strong alcohol is set to increase, raising the price of a 0.5-litre bottle by an average of €0.27. From 1 March 2028, excise duty will rise for all alcoholic beverages, with the final price of strong alcohol increasing by €0.51, wine by €0.15 to €0.30, and beer by €0.03 per bottle.
Next year and from 2027, a sharper increase in rates is planned for all tobacco products
– by 5% more than previously planned. Compared to current prices, from 2028 the price of a pack of cigarettes will increase by €2.20, reaching €7.50. For heated tobacco, the increase is planned at €0.35 per pack, and for a 2ml e-liquid package – €0.15.
From 2028, tax increases are also planned for sweetened beverages, and a separate excise duty rate will be set for energy drinks.
It is also planned that from 2028 excise tax will apply to non-alcoholic carbonated drinks prepared on-site in catering establishments. Until now, excise duty has not been applied to either still or carbonated drinks prepared for immediate consumption at the point of sale.
Changes in excise duty will also affect oil products, and from 2028 it is planned to abolish the reduced tax rate for oil products used in free ports and special economic zones. To promote the use of renewable and environmentally friendly energy in equipment and machinery, including electricity, the current relief will be replaced by the general excise duty rate.
The current excise tax relief for fuel will remain available to businesses until the end of 2027.
Meanwhile, amendments to the State Social Benefits Law supported in the first reading provide that the childcare benefit will be paid until the child reaches 1.5 years of age, instead of the current two years. At the same time, the benefit will be increased from the current €171 per month to €298 per month for a child up to 1.5 years of age. For children born until 2 November next year, the benefit will continue to be paid until the child reaches the age of two.
Changes will also apply to the family state benefit for children who are studying. It is planned that the benefit for a child aged 16 to 20 will be granted if the young person is studying at a college or university full-time and has not entered into marriage. Thus, for families whose children study at universities or colleges, the benefit will be restored and will continue until the age of 20. Currently, the benefit is paid for children studying in secondary or vocational education.
From next year, the one-off childbirth benefit will also increase to €600. Currently, this benefit is €421.17. The guardianship benefit for child maintenance will also rise: for a child up to the age of seven it will be €390 per month instead of €215, and for children aged seven to 18 – €468 per month instead of €258.
The care allowance for adoptive parents is also planned to increase,
and from 2026 the allowance will be €1,041 per month – 70% of the average national wage subject to social contributions. If the allowance is granted in 2025 and continues next year, the amount will be up to €956 per month. Currently, the minimum allowance is €171 per month.
The guardianship allowance for performing the duties of a guardian is also planned to increase. From next year, it will be €298 per month instead of €54.07. Amendments to the State Social Insurance Law provide for non-working guardians to receive social guarantees, as compulsory contributions for pensions, unemployment and disability insurance will be made from the state basic budget.
The adoption benefit is also planned to increase, and from next year it will be €195 per month for a child up to seven years old instead of the current €107.50, and €234 per month for a child aged seven to 18 instead of €129. The one-off allowance for adoption will rise from the current €1,422.87 to €2,433.
Meanwhile, amendments to the Law on Maternity and Sickness Insurance provide that next year
the parental benefit for working parents will remain at the current level – 75%.
To improve material support measures for families with children, a total of €42 million in additional funding is planned for next year, and €24.1 million for support measures for children in out-of-family care.
MPs also supported in the first reading amendments to the laws on service pensions for personnel of the Ministry of the Interior (MoI) with special ranks, military service pensions, service pensions for officials of MoI institutions and the Prison Administration, diplomatic service pensions, service pensions for officials of the Corruption Prevention and Combating Bureau (KNAB), service pensions for emergency medical service employees, and laws regarding service pensions for state and municipal orchestra, choir, theatre and circus artists and ballet artists, as well as amendments to the Military Service Law. These amendments provide for gradual changes to the service pension system.
“At present, service pensions are granted depending on how long a person has worked in a particular position or profession and their age. However, the rules vary across sectors – each with its own special conditions. This has created inequality between professions — some have easier conditions for receiving a pension, while others face more difficult ones. The calculations also differ. Moreover, these conditions have not been regularly reviewed in light of changes in the labour market and sectors, and they cost the state budget more and more,” said Budget Committee Chair Anda Čakša (New Unity).
The amendments provide for a gradual reform of the system
affecting those employees who currently can retire earlier than the general retirement age, including soldiers, interior system employees, border guards, firefighters and others. In the future, service pensions will be granted only to those whose work involves increased risk, danger to health or life, such as firefighters and rescuers.
The changes aim to reduce inequalities between service pension recipients and the rest of society, creating a fairer overall system. They are planned to be implemented from 2027, gradually introducing unified principles and a transparent financing model. At the same time, social protection will be maintained for those whose work is associated with special risks or public safety.
The amendments provide for increasing the length of service and age required for service pensions by six months every year over five years, and for excluding the last two months from the pension calculation. For persons who as of 1 January 2027 have accumulated less than 10 years of service, the service pension calculation formula will also be changed. The pension will be calculated based on the salary received during the last 10 calendar years, ending two months before release from service.
The minimum and maximum amounts of service pensions are planned to be reduced by 10–20%,
equalising them between services, including by 5% if a person is released or dismissed from office.
Prosecutors and judges are planned to be excluded from the list of professions eligible for service pensions, and will instead receive a special pension. Diplomats will also be excluded. It is also planned to abolish service pensions for ballet, circus and choir artists, puppet theatre actors, orchestra musicians, solo vocalists and theatre actors. These professions will instead receive support measures for retraining for another profession.
Under the planned changes, service pensions will no longer apply to positions and professions where duties do not involve regular threats to health and life, including support functions.
Time worked in the private sector will be allowed to count towards service, but not more than 20% of the total service period. Service pensions will be paid until the general retirement age is reached. After that, they will be discontinued and the person will receive a regular old-age pension based on their social insurance contributions.
The planned changes will not apply to those currently employed in service pension professions
who at the time the relevant amendments enter into force already receive or have acquired the right to a service pension in accordance with the current regulations (qualified for a service pension by age and years of service, even if they continue employment).
The reform is also prompted by the rapidly increasing fiscal burden of the service pension system. It is projected that in five years the state budget expenditure for these pensions will exceed €200 million per year.
Before reviewing the budget and accompanying laws, the Saeima’s Budget and Finance (Taxation) Committee heard from ministries about next year’s expenditures with the aim of finding possible savings.
As reported, on the 14th of October the government supported the 2026 state budget,
under which total consolidated budget revenues are planned at €16.064 billion and expenditures at €17.945 billion.
Compared to the 2025 budget, in 2026 revenue growth exceeds expenditure growth. State budget revenues are projected to increase by €944.6 million, while expenditures will rise by €804.3 million.
Planned revenue in the basic budget amounts to €10.9 billion, and expenditures to €13.2 billion. In the special budget, revenues are planned at €5.5 billion and expenditures at €5.1 billion.
Latvia’s GDP next year at current prices is expected to reach €43.953 billion,
with the budget deficit at 3.3% of GDP, and government debt not exceeding 55% of GDP.
General government expenditure will fall to 47% of GDP next year, compared with 47.5% this year. At the same time, despite the overall reduction in expenditure, spending on defence will increase.
Overall, expenditure next year has been reduced by €171 million. Priority measures are allocated €693.5 million, including €448.3 million for defence and security.
The Ministry of Finance notes that the 2026 state budget and the medium-term budget framework for 2026–2028 have been prepared in accordance with EU and national fiscal discipline rules.
The next year’s budget provides for additional investments in national security, support for families with children and quality education. The MoF also notes that the budget includes more than €1 billion in EU fund investments, as well as an increase of €151.4 million in municipal revenues.
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