Without significant reforms in public administration, cuts in budget spending and measures to stimulate economic growth, Latvia could face serious financial difficulties in the coming years, Prime Minister Andris Kulbergs (United List) told journalists following a meeting with representatives of the Latvia First (LPV) party.
Kulbergs announced that the meeting with LPV marked the conclusion of the first round of government formation talks with all centrist parties represented in the Saeima. The prime minister said he had briefed LPV representatives on Latvia’s financial situation, the challenges facing next year’s state budget and long-term economic forecasts.
According to Kulbergs, Latvia will face a situation as early as next year in which there will not be enough funding to meet commitments previously made to society and international partners. He warned that if the current policy course remains unchanged, Latvia could find itself in an extremely difficult fiscal position by 2030.
The government will therefore have to consider substantial reductions in budget expenditure, review the functions of ministries and the structure of public administration, and postpone certain planned initiatives until sufficient financial resources become available.
At the same time,
Kulbergs emphasized that spending cuts alone would not be enough.
In his view, Latvia must make greater efforts to attract investment, stimulate economic activity and increase the involvement of private capital in the economy.
The prime minister noted that a major challenge would be the transition period between the current and the next European Union multiannual budgets, during which Latvia’s economy is expected to receive less EU funding than before. He believes this shortfall should be offset by increased investment and stronger business activity.
The discussions also covered Kulbergs’ previously announced proposal to establish a Latvian Development Fund, which would bring state-owned enterprises under the management of a single investment fund. The prime minister expressed confidence that such an approach would allow for more efficient management of state assets and help attract additional investment into the economy.
Other proposals discussed included centralizing certain areas of public administration, expanding the use of artificial intelligence, improving civil service regulations, introducing centralized procurement and ensuring more efficient management of European Union funds.
A separate part of the meeting was devoted to the Rail Baltica railway project.
Kulbergs reiterated Latvia’s position that the project’s implementation requires clear and reliable funding from the European Union. Without such financing, Latvia cannot afford to carry out the project, the prime minister said.
Commenting on the talks with LPV, Kulbergs said the party had demonstrated an understanding of the seriousness of Latvia’s financial situation. He explained that he had asked LPV representatives in which areas the party would be willing to abandon its election promises or accept unpopular decisions if necessary to ensure the country’s financial stability.
As previously reported, LPV leader Ainārs Šlesers told the LETA news agency that his party was prepared to support a government of professionals formed by Kulbergs with its 17 parliamentary votes, even if LPV itself did not hold any ministerial positions.
Šlesers identified the reorganization of public administration, the merging of ministries and government institutions, the reduction of bureaucracy and the establishment of a government of professionals as the most important potential areas of reform.
The next round of government formation talks is scheduled to take place after the 4th of November.