The state budget plan for 2023 is not ideal, but it is well-balanced when it comes to various public needs, said Latvian PM Krišjānis Kariņš at a meeting of the parliament’s Budget and Finance Committee on Tuesday, the 14th of February.
The committee conceptually supported the government’s proposed legislative draft On the State Budget for 2023 and budget content for 2023, 2024 and 2025. In it, the state consolidated budget revenue is planned at EUR 12.721 billion and expenditures – at EUR 14.673 billion for 2023. The committee also conceptually approved amendments for multiple accompanying legislative acts.
The head of the government explained the budget plan already provides a direction towards transformation of the economy, which will be measured with increased exports of added value products. For Latvia as a smaller country than most it is important to manufacture goods and provide services for the European and global market, said Kariņš.
To make sure dozens or hundreds of new investors enter Latvia,
it is necessary to enhance state defence, improve and change the education system,
said the PM. The politician said the emphasis in the budget is put on state defence and defence in general.
Kariņš said the budget prepared for 2023 is technical in nature, because it partially meets the approved average-term budget for 2021. Additionally, it was decided to allocate another EUR 710 million towards various priorities, added the PM.
Kariņš also explained that if the general budget deficit of 4.2% of GDP mathematically does not calculate the funding intended for defence, then it becomes certain that structural deficit is at around 0.5%. This means the budget for 2023 can be considered a fiscally conservative budget, said the PM.
Considering the great temptation to spend more for the benefit of the population, the government deserves praise for putting together a fiscally responsible budget for 2023, said the chairperson of the Fiscal Discipline Council Inna Šteinbuka during the meeting of the Budget and Finance Committee. She did say that currently the budget does not include a plan to continue state energy support measures in the upcoming autumn and winter season. If the budget is completed better than expected,
the additional funds would need to be used to provide energy support for residents next season as well.
Šteinbuka said if the budget deficit is increased, it would reduce Latvia’s ratings, as well as increase state debt’s interest payments. She also invited to keep in mind the risks that could slow economic growth.
More on this topic: Fiscal Discipline Council says Latvia’s budget complies with economic situation