Latvian President Edgars Rinkēvičs has promulgated the state budget for 2024. Consolidated budget revenue is planned at EUR 14.5 billion, whereas costs are planned a little above EUR 16.2 billion.
General government budget deficit is planned at 2.8% of Latvia’s GDP.
The Saeima passed the budget on the 9th of December. 52 Saeima deputies voted in favour, and 27 voted against.
The parliament went through the budget and 19 accompanying laws in three days. 27 hours were spent on debates. The budget’s review took longer than expected because politicians were committed to not work on the budget at night. Comparatively speaking, the budget of 2023 was approved in March after approximately a day-long meeting. The parliament received criticisms for wasted work.
Approval of the state budget of 2022, which was done using e-Saeima platform during the Covid-19 pandemic in 2021. Together with breaks, the review of the budget project took 51 hours. Budget preparation lasted between the 15th and 23rd of November (weekends included).
Saeima deputies submitted several hundred proposals for the state budget. The total amount of money their proposals amounted to was EUR 5 billion. Only a handful of suggested changes were supported, such as Saeima speaker Daiga Mieriņa’s proposal to reduce the parliament’s expenses by EUR 150 000 in 2024 and allocate a relatively small amount of money towards treatment of rare diseases.
The Saeima did support certain ideas proposed by the opposition, which were later officially formulated as proposals of the Budget and Finance Commission. The proposal from the Combined List to allocate EUR 20 000 for people suffering from hearing problems was supported was also supported by the parliament.
Following the proposal from Saeima deputy Ramona Petraviča (Latvia in First Place), it was decided to allocate EUR 13 000 towards the treatment of rare diseases in 2024.
Members of the ruling coalition promised and, to their credit, stuck to the promise to not use so-called deputy quotas this year.
In 2024 the state consolidated budget’s revenue is planned at nearly EUR 14.5 billion, whereas expenditures are planned at slightly above EUR 16.2 billion. After the budget’s approval, however, numbers may yet be clarified in accordance with the redaction approved in the final reading.
The general government, which includes the entire state and municipal administration framework, as well as social insurance institutions, revenue for next year is planned at EUR 17.8 billion. Expenditures are planned at EUR 19.1 billion. This way the general government budget deficit is planned at EUR 1.3 billion or 2.8% of GDP.
Budget deficit for 2025 is planned at 2.3% of GDP. For 2026 the budget deficit is planned at 0.9% of GDP. The state debt is planned at EUR 18.6 billion or 41% of GDP in 2024.
The three main priorities listed for next year are domestic and external security, education and healthcare.
Compared to the budget of 2023, the planned state budget revenue is planned to be nearly EUR 1.8 billion larger. The state budget expenditures for 2024 are planned to be EUR 1.5 billion larger when compared to the expenditures of the 2023 state budget.
The base budget’s planned revenue is planned at around EUR 10 billion. Expenditures are planned at more than EUR 12.1 billion. The special budget’s revenue is planned at almost EUR 4.8 billion; expenditures are planned at almost EUR 4.4 billion.
According to Minister of Finance Arvils Ašeradens, the planned tax policy changes in the 2024 budget are minimal and will not significantly increase the tax burden for residents. During the review of budget draft, the biggest discussions surrounded the 12% VAT rate for fresh fruits and vegetables and the application of the natural resource tax on wet wipes.
The Saeima passed amendments to the Law on Excise Duties, which provide for a gradual increase of excise duties for alcoholic beverages and smoking products. The parliament also passed amendments to the Enterprise Income Tax Law that make it a duty for banks and non-banking lenders to pay 20% enterprise income tax advance payment from their previous year’s revenue.
Other notable amendments passed by the Saeima include amendments to the Law on Lotteries and Gambling Fee and Tax, which provide for raising the tax on gambling by 20% next year.
This budget is planned to move towards increased defence spending: 3% of GDP by 2027 and 2.5% of GDP in 2026.
The minister also mentioned that one major addition to the 2024 state budget will be the next year’s EU funding of EUR 1.659 billion.
Latvian Prime Minister Evika Siliņa previously said that he budget for 2024 will be the country’s security and longevity budget.
She said security affairs will remain a hot topic in the region for years to come. This is why investments are focused at reinforcing Latvia’s border, increasing combat capabilities of the army and expanding the capacity of various services.
The GDP forecast at current prices for 2024 in the amount of EUR 45.524 billion, for 2025 in the amount of EUR 48.338 billion and for 2026 in the amount of EUR 51.122 billion has been used in the preparation of the budget. The forecast of the GDP growth rate for 2024 is 2.5%, for 2025 – 2.9%, for 2026 – 2.9%.
In its turn, the inflation forecast used in the preparation of the budget for 2024 is 2.2%, for 2025 – 2.5%, but for 2026 – 2.3%.
The budget-adjusted expenditure in 2024 is set at EUR 2.68 billion, including the European Union (EU) Structural Funds and Cohesion Fund-adjusted expenditure of EUR 1.62 billion, the Common Agricultural Policy and the Common Fisheries Policy-adjusted expenditure of EUR 701.747 million and the national debt service-adjusted expenditure of EUR 358.551 million.
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