According to an informational report submitted to the government by the Ministry of Finance titled “On Priority Measures to Be Included in the State Budget Law for 2026, 2027 and 2028”, an additional 565.5 million euros is planned for the government’s set priorities in the 2026 state budget — security, support for families with children, and education.
The ministry states that out of this amount, 320.3 million euros will be allocated to security, 45 million euros to education, 94.8 million euros to family support, and 105.4 million euros to other measures. Most of this additional funding will be secured by reducing state budget expenditures.
While preparing the 2025 budget, it was already decided to reduce baseline expenditures by 50 million euros annually in the medium term. When drafting the 2026 budget, ministries jointly identified and agreed on 171 million euros in spending cuts, which the government approved on 26 August this year. A further 12.4 million euro reduction has since been achieved.
In total, expenditure reviews have created 233 million euros in additional fiscal space for 2026. For the whole 2026–2028 period, expenditure cuts will amount to 814.1 million euros.
The largest share of new priority funding will go to national defence and internal security:
320 million euros in 2026, 444 million euros in 2027, and 655 million euros in 2028. The ministry explains that, under the activated national escape clause, these defence expenses can be financed outside the usual fiscal rules.
Of the 2026 defence funding, 296 million euros will go to the Ministry of Defence for improving combat capabilities, including joint procurement of defence goods with other countries. 10 million euros will be invested in equipment, and 3 million euros will be allocated to the Ministry of the Interior to strengthen security in border municipalities.
As a result, defence spending will reach 4.6% of GDP in 2026, 4.9% in 2027, and 4.7% in 2028 according to NATO methodology.
Beyond defence,
513 million euros is planned over the medium term for education and family support:
139 million euros in 2026, 179 million euros in 2027, and 194 million euros in 2028.
For education, 45 million euros will be provided in 2026, 90 million euros in 2027, and 86 million euros in 2028. The funds will be used to improve education quality and to implement the new “Programme in School” financing model from 1 September 2026. This includes hiring more support staff. Schools will have a one-year transition period to adapt to the new model while maintaining the current system during the transition.
For support for families with children, 94 million euros is planned in 2026, 88 million euros in 2027, and 107 million euros in 2028. This includes better material support for families and children in out-of-home care, maintaining the parental benefit at 75% for working parents, and improving maternal and child health through better access to healthcare services and medicines.
Other measures include 10 million euros to expand palliative care and 3.2 million euros for social rehabilitation services.
The non-taxable minimum will be raised from 510 to 550 euros per month, and the minimum wage will be raised from 740 to 780 euros per month. Pensions up to 1488 euros will be indexed from the 1st of Ocotber 2025, ensuring that 98% of pensions are fully indexed, compared to 683 euros in 2024. From the 1st of July 2026, the VAT rate on essential foods — bread, milk, eggs and fresh poultry — will be reduced for one year as a pilot project. Budget support for agriculture will continue, with 59.3 million euros allocated in 2026.
To finance these priorities, the government also plans to raise revenue by increasing state-owned company dividends, raising gambling tax rates from 2026, accelerating excise duty hikes on alcohol and tobacco, and amending corporate income tax to balance investor burdens, improve access to alternative financing, and lower financing costs. These measures are expected to generate 65.3 million euros in 2026, 108.9 million euros in 2027, and 136.8 million euros in 2028.
The National Tripartite Cooperation Council is expected to discuss the 2026 budget framework today. The Cabinet of Ministers plans to approve it on the 14th of October, and the budget package will be submitted to the Saeima on the 15th of October.
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