It is planned for the state budget of 2023 to have a deficit of 4.2% of GDP, but this is necessary to implement multiple major priorities, Latvia’s PM Krišjānis Kariņš told journalists on Monday, the 6th of February.
The head of the government noted that on Tuesday, the 7th of February, it is planned to approve the state budget in the government. Once this is done, Minister of Finance Arvils Ašeradens will submit it to the Saeima for review.
The state budget of 2023 is planned at EUR 14.7 billion,
said Kariņš, adding that the state budget project allocates the majority of its funds towards external and internal security, healthcare, education and science.
The state budget to include a deficit of 4.2%, but the PM said he is confident increased expenditures are necessary to cover «multiple important things». This includes single-time expenses that will not generate deficit in the coming years.
The head of the government said the budget deficit will be used to continue providing energy support for residents and businesses and aid for Ukrainian war refugees. There are also plans for serious investments to reinforce Latvia’s defensive capabilities.
The budget was composed to implement the government’s policy regarding transformation of Latvia’s economy, so that there are better-educated people in the country, offer residents better healthcare and to improve quality of life in various areas, said the PM.
On the 13th of January Latvia’s government approved the state budget plan for 2023 composed by the Minister of Finances.
The report from the ministry mentions this year’s state budget provides for allocation of EUR 710 million towards various new government priorities and programmes.
The prepared budget offer provides for allocation of EUR 402 million towards state security and foreign policy. Quality of life priorities are to receive additional funding of EUR 162 million. EUR 71 million is to be allocated towards competitiveness. EUR 31 million is to be allocated towards energy, climate and environment. Additional funding of EUR 215 million is planned to be allocated towards various additional measures in 2023.
Additionally, the state budget is planned to receive additional contributions from state capital associations, ensuring funding worth EUR 141 million.
From Latvenergo it is planned to receive EUR 30 million and from Latvian State Forests it is planned to receive EUR 90 million.
This funding is divided in accordance with the budget and does not generate additional deficit or influence the approved fiscal space. Additionally, it is planned to allocate EUR 345 million in the form if single-time investments towards state priorities and to reinforce security services.
Minister of Finance Arvils Ašeradens explained at the government’s extraordinary meeting that during the preparation of the budget offer, the government had allocated a significant amount of funding towards improving state security with an emphasis on single-time measures that are possible to be financed outside the fiscal space – EUR 354 million.
One national priority supported by the government is the increase of minimal income. This measure will cost the state budget EUR 10.35 million. There is also the allocation of EUR 6.57 million towards reconstruction of the office of the UN in New York, rent of temporary premises and coverage of moving costs.
Another EUR 12.63 million is planned to be allocated towards quality protection of Latvia’s national security economic interests in foreign countries. EUR 5 million is planned to be used to improve healthcare services for children. EUR 10 million is planned to be used for various investment projects.
To ensure residents have access to necessities in the event of national threats, it is planned to divert funding of EUR 6.22 million. The government also plans to allocate EUR 9 million towards cyber security.
Additionally as part of the state budget for 2023 it is planned to allocate EUR 18.38 million towards public railway infrastructure. Rail Baltica project is set to receive EUR 2.38 million. EUR 5.11 million is planned to be used towards Ukraine’s reconstruction this year.
Funding towards procurement of anti-air defence systems will be outlined every year in order to ensure public security in these trying geopolitical times.
This year and in future years it is planned to allocate EUR 200 million towards anti-air defence systems.
Interior affairs infrastructure will be enhanced as well by means of procuring new fire fighting vehicles and by constructing State Fire and Rescue Service Disaster Centres. The Ministry of the Interior has developed an offer that will ensure regional coverage with modern crisis centres across all of Latvia’s territory. EUR 23 million is planned to be spent on the purchase of specialised fire fighting and rescue vehicle. EUR 3.64 million is planned to be allocated towards creation of new fire departments.
The government in Latvia has agreed on general state priorities, which are set to receive funding of EUR 132 million from the available fiscal space. In 2023 it is planned to increase the minimal income level in the country.
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