Latvian government mulls over finances

On Tuesday, the 28th of February, Latvia’s Cabinet of Ministers rejected the proposals submitted by opposition in the Saeima for the distribution of finances of the state budget for 2023. Ministers, on the other hand, broke apart internally over increased state financing needs.
The government did approve for the second reading amendments to various laws. These included approximately 20 technical proposals submitted by ministries that will not create fiscal influence. Then there are proposals from Saeima’s Legal Affairs Office, which the government also approved. Proposals submitted by Saeima deputies, however, were not.
The government reviewed nearly 250 proposals. 171 of them were for the state budget of 2023. Minister of Finance Arvils Ašeradens said during a press-conference after the government’s meeting that

these were mostly proposals from the opposition with a significant fiscal influence, exceeding the budget deficit by EUR 2.13 billion.

Among the proposals approved by the government, Ašeradens mentioned the proposal from the Saeima’s Public Administration and Local Government Committee to allocate an additional amount of EUR 135 298 to the Central Election Commission in 2023 and another EUR 180 000 in the coming years. The government also approved the proposal from the Ministry of Finance to allocate EUR 0.9 million grant to municipalities with limited financial resources.
During the Tuesday’s meeting the government discussed this year’s budget.

PM Krišjānis Kariņš invited ministers who are not prepared to work to implement reforms to resign.

He said «we can no longer afford to push around the monetary system without reforms». He added at the same time that if any of the ministers aren’t prepared to work this way, they should inform him after the meeting.
At the same time, Minister of Finance Arvils Ašeradens invited adding to the minutes of the meeting a proposal to divert money saved in this year’s budget towards priorities listed in the government’s declaration.
During the government’s meeting there was also a discussion about funding necessary for the healthcare sector. Minister of Healthcare Līga Meņģelsone invited listing her sector as one of the priorities. Minister of the Interior Māris Kučinskis said ‘we won’t abandon Līga’, inviting adding to the minutes of the meeting that healthcare will be one of the government’s priorities.
The Ministry of Finance reported that, aside from single-time expenditures,

the budget expenditures of the Ministry of Health already reach 12.27% of Latvia’s GDP,

which already exceeds the goal listed in the government declaration to get healthcare funding reach 12% of overall budget expenditures. The ministry’s representatives explain that the declaration mentions movement towards, not specifically 12%, adding that this is not a matter of one year – it is an objective for a four-year period.
In a situation when significant funding is provided to enhance domestic and external security, to cover increasing energy prices, to support Ukraine, to provide necessary funding outside the fiscal space, then the funding for healthcare should be provided with a significant boost automatically, the ministry’s representatives explained. For example, the additional EUR 1 billion towards procurement of anti-air system means another EUR 120 million increase for base expenditures, because otherwise the percentage from budget expenditures would go down.
Currently the funding for healthcare outlined in the state budget for 2023 is EUR 1 668 556 299, which is 11.37% of budget expenditures. However, aside from single-time expenditures, healthcare funding reaches 12.27% of GDP. Together with funding of EUR 166.67 million from EU funds, Latvia’s healthcare sector’s financing will reach EUR 1 835 222 966 in this year’s budget or 13.5% of GDP.
Also read: Although expenditures are on a rise, Latvian government reports budget surplus on all levels