Members of Parliament today referred next year’s state budget bill and its accompanying package of draft laws to Saeima committees for review.
The 2026 state budget’s accompanying package includes nearly 50 draft laws, among them changes to certain taxes and reforms to the service-pension system.
The votes showed that the ruling coalition managed to secure a 51-vote majority in Parliament today, with the factions of New Unity (JV), The Progressives, and the Union of Greens and Farmers (ZZS) joined by coalition-supporting independent MPs Skaidrīte Ābrama, Oļegs Burovs, and Igors Rajevs. Jānis Dinevičs, newly seated as an MP elected from the ZZS list, also voted to send the bills to committee.
Meanwhile, on the specific vote on next year’s budget bill, the ruling coalition’s 51 votes were joined by independent MP Andrejs Ceļapīters, originally elected from the JV list, providing a 52nd vote.
The opposition, for its part, mustered around 40 votes for this Saeima sitting, though not unified in all votes.
Some previous Saeima sittings had been suspended because the ruling coalition failed to ensure a quorum. The Saeima consists of 100 members. Under the Constitution and the Rules of Procedure, sittings may only be held if at least half of MPs are present.
For next year’s state budget, consolidated general government revenues are planned at €16.064 billion, while expenditures are set at €17.945 billion.
Earlier, New Unity faction leader Edmunds Jurēvics told LETA that the first reading of next year’s budget is expected to begin on 5 November, while the final reading could start on 3 December, with work concluding on the 5th of December.
Receiving the budget bill and the accompanying package on Wednesday, Anda Čakša (JV), Chair of the Saeima Budget and Finance (Taxation) Committee, promised a careful review of each ministry’s expenditures. She explained that starting next week,
ministry representatives will be invited to the committee to examine next year’s spending
and possibly find new ways to reduce expenditures.
Before referral to committees, MPs were able to speak “for” and “against.” Several opposition deputies used this to criticize Prime Minister Evika Siliņa’s (JV) government, saying the promised savings had not been found and that the state debt continues to grow, which will affect people’s well-being in the future.
Edgars Tavars, head of the United List (AS) faction, criticized the budget process as “one big botch job.” In his view, many budget lines for next year require much more thorough evaluation.
MP Česlavs Batņa (AS) argued in the debate that the new school financing reform, “Programma skolā” (Program at School), is being pushed “with a minus sign,” i.e., it is known that next year €8 million is lacking, and in 2027 the shortfall is around €20 million. “If we are implementing a reform, then let’s finally implement it properly in the Saeima and the civil service—allocate the necessary funding,” Batņa said.
Opposition MP Svetlana Čulkova (Stabilitātei) complained that all the bills related to service pensions are hypocrisy.
According to her, the government is taking money away from the people who pay its salaries.
MP Artūrs Butāns (NA) again called, as he did last year, to make the budget more open and transparent by showing greater detail on expenditures.
Compared to the 2025 budget, in 2026 the increase in state budget revenues will exceed the increase in expenditures. State budget revenues are planned to grow by €944.6 million, while expenditures will grow by €804.3 million.
In the basic budget, planned revenues total €10.9 billion and expenditures €13.2 billion. In the special budget, revenues are planned at €5.5 billion and expenditures at €5.1 billion.
Latvia’s GDP next year at current prices is projected at €43.953 billion, implying a budget deficit of 3.3% of GDP, while public debt will not exceed 55% of GDP.
General government expenditures next year will decline to 47% of GDP,
compared to 47.5% this year. At the same time, while total expenditures decrease, defense spending will increase.
Overall, expenditures next year are reduced by €171 million. €693.5 million is allocated to priority measures, including €448.3 million for defense and security.
The Ministry of Finance (MoF) notes that the 2026 state budget and the medium-term framework for 2026–2028 have been prepared in accordance with EU and national fiscal-discipline rules.
Next year’s budget provides additional investments in national security, support for families with children, and quality education. The MoF also notes that the budget includes over €1 billion in EU funds investments, as well as a €151.4 million increase in municipal revenues.
The MoF explains that the 2026 budget is based on cautious macroeconomic forecasts prepared in June of this year. They foresee moderate economic growth and a gradual reduction of inflation in the medium term. The MoF concluded that the main drivers of growth this year are construction, manufacturing, and trade. After years of stagnation, corporate lending has begun to grow strongly this year, with the loan portfolio to companies in August up 16% compared to August 2024.
Economic growth for this year is forecast at 1.1%,
while next year’s budget plans for 2.1% growth, and up to 2.2% in subsequent years.
The 2025 inflation forecast has been raised to 3.5%, mainly due to rising food prices and higher district-heating tariffs. In the following years, the MoF expects inflation to gradually decrease—to 2.3% in 2026 and 2.2% in later years.
The general government budget deficit is projected at 2.9% of GDP in 2025, rising to 3.3% in 2026, and remaining around 3.6% in the medium term. The MoF explains that the increase in the deficit is driven by higher funding for national defense and security. These expenditures are made under the EU fiscal rules’ defense “general escape clause,” which allows temporary exceedance of deficit and spending-growth limits when additional funds are directed specifically to defense.
The MoF stresses that Latvia is using this flexibility responsibly, maintaining fiscal sustainability and foreseeing a gradual reduction in the deficit once the escape clause period ends.
The budget also takes into account that in 2025 the government implemented a labor-tax reform,
reducing the tax burden on employers and employees. According to the MoF, the reform will reduce budget revenues by about €1 billion in 2025–2028.
As a result of state-budget expenditure reductions, a €233 million fiscal saving is ensured for 2026, while over 2026–2028 total expenditure reductions will exceed €800 million, the MoF reports.
Compared to the 2025 plan, 2026 state basic-budget function expenditures are reduced, including at the MoF by 16%, the Ministry of Justice by 10%, the Ministry of Climate and Energy by 9%, the Ministry of Economics by 9%, the Ministry of Foreign Affairs by 5%, and others.
In total, €693.5 million in additional funding is planned for government priorities in 2026,
€724.8 million in 2027, and €935.9 million in 2028. A significant share—€448.3 million next year—is earmarked for strengthening national security, enabling upgrades to the National Armed Forces’ combat capabilities, military infrastructure, and border protection systems, as well as fostering the local defense industry and job creation.
Overall defense funding next year will reach €2.2 billion, the MoF states. According to NATO definitions, Latvia’s defense spending will reach 4.9% of GDP in 2026, 5.0% in 2027, and 4.9% in 2028.
An additional €94.8 million is directed to support for families with children and improvements in maternal and child healthcare, providing higher benefits, better access to services, and enhanced social security. Next year’s funding for the health function will increase by €27.9 million compared to 2025, totaling €1.9 billion.
In education,
€45 million is allocated to implement the new teacher remuneration model “Programma skolā”,
strengthen support staff, and ensure quality education across Latvia.
Additional investments are also planned for socially important measures—expanding palliative care, improving access to social services and rehabilitation, and supporting farmers.
EU Cohesion Policy funds and the Recovery and Resilience Facility (RRF) will remain among the key drivers of Latvia’s economic growth in 2026, the MoF emphasizes. Their volume will exceed €1 billion, remaining at a historically high level and significantly above previous programming periods.
The MoF reports that more than €2.2 billion has already been secured in EU-fund projects by 2026, and 93% of the total €1.97 billion in RRF funding is reserved for specific investments being implemented according to plan.
The MoF points out the special importance of new investments made using the European Commission’s “ReArm Europe” regulation, which allows 10% of EU funds to be directed to security and defense projects, including the development of military and business mobility.
In addition to EU funds and the RRF, other foreign financial assistance programs continue in Latvia,
the MoF notes. Under Swiss financial assistance, €49.8 million is planned by 2029, including a €42.4 million Swiss grant and state co-financing for four programs—children’s cancer care, contaminated site remediation, applied research, and work-based learning.
In the new EEA and Norway Grants period through 2031, Latvia will be able to invest over €100 million (with state co-financing) in three priority areas.
Of this, €43 million will be invested in local development and resilience, aligned with the government’s main priority of “State Security,” funding civil protection infrastructure—new shelters and the adaptation and equipping of existing spaces. Funds are also allocated for generators to ensure uninterrupted electricity supply for critical services in medical institutions and state social care institutions.
€27.5 million will go to green innovation, including support for business and contaminated-site remediation, while €15 million will be directed to a corrections service program—construction of a women’s prison, strengthening corrections services, and rehabilitation services for children with substance addictions. The MoF explains that these
foreign investments complement EU funds, reducing the burden on the state budget
and ensuring long-term investments in state security and public welfare.
From the state budget, the largest investments—€545.9 million—will go to national defense, strengthening the Armed Forces’ combat capabilities, developing military infrastructure and border protection systems, and supporting the local defense industry.
€67.9 million in interior ministry investments are planned for security-service infrastructure modernization, including new fire and rescue depots, police vehicle renewal, and civil protection strengthening.
Funding is also planned for education, health, and cultural infrastructure, the MoF notes. The Ministry of Education and Science is allocated €11.9 million, including for digitizing Latvian language resources and ensuring a modern learning environment. Health-sector investments are directed at hospital infrastructure modernization and e-health system upgrades, while €5.7 million for the Ministry of Culture will be used for cultural heritage preservation, digital security, and museum exhibition modernization.
Next year,
€3 million will be allocated to five border municipalities—Ludza, Krāslava, Balvi, Alūksne, and Augšdaugava
—to strengthen security at the EU external border. Municipalities also have expanded possibilities to borrow for investment projects, especially in areas related to security, education, and demography.
The personal income tax (PIT) split next year is set at 78% for municipalities and 22% for the state budget. The budget law stipulates that projected PIT revenues in municipal budgets amount to €2.278 billion.
The annual allowable increase in total municipal borrowing next year is €168.14 million.
Municipalities are projected to see stable tax-revenue growth in the coming years—€151.4 million (6.1%) in 2026 including compensation. The MoF notes that the PIT forecast is guaranteed in full; revenues exceeding the guaranteed level will be directed to debt repayment.
Earmarked grants to municipalities next year are planned at €676.286 million.
This includes €527.435 million for teacher salaries and social insurance contributions in municipal primary and general secondary schools, special education institutions, vocational schools, and partial extracurricular education programs.
€73.96 million is provided for teacher salaries and social insurance in special preschool groups
and for special education institutions providing boarding services.
€72.829 million is provided for teacher salaries and social insurance for educating children from age five in municipal education institutions, and €2.063 million for artistic ensemble leaders’ salaries and social insurance.
State budget grants to municipalities next year total €106.32 million, including €50.923 million for the municipal financial equalization fund, and a planned grant of €51.794 million, integrated into the financial equalization system according to PIT distribution principles. An additional €3 million is allocated to border municipalities.
A grant of €602,928 is provided to municipalities for residents in elderly homes and centers (€11,376 per resident) who were admitted before the 1st of January, 1998.
The total increase in municipal guarantees is set at €56.915 million
for municipal-owned companies’ loans for investment projects, and for loans from the state budget for fuel purchases, with a repayment term up to two years and a deferred principal payment up to one year from the date of the loan agreement.
The MoF notes that public-sector efficiency measures include reducing administrative costs and positions at the State Revenue Service (VID), merging the Lotteries and Gambling Supervisory Inspectorate into VID, and reviewing funding for completed infrastructure projects (including the Liepāja prison build), among other steps aimed at more efficient use of public funds.
The government has also committed not to raise base taxes, making only changes that serve the public interest, the MoF notes. Next year, it plans to raise excise duties on alcohol and tobacco, the gambling tax, and the natural resource tax. A reduced 12% VAT rate is also planned for several food products—bread, eggs, milk, and chicken.
The MoF notes that
in 2026 a €40 increase is planned for both the minimum wage and the non-taxable minimum,
reaching €780 and €550 per month respectively. Also, from 1 October 2025, pensions up to €1,488 will be indexed, ensuring that 98% of pensioners have their pensions adjusted in full.
Next year’s budget also provides that AS “Latvenergo” will pay €141 million in dividends into the state basic-budget revenues in 2026; AS “Latvijas valsts meži”—no less than €143.896 million; AS “Augstsprieguma tīkls”—no less than €5.716 million; AS “Latvijas Loto”—no less than €9.358 million; and VAS “Latvijas Valsts radio un televīzijas centrs”—no less than €6.261 million.
By contrast, VAS “Latvijas gaisa satiksme” will not pay dividends from profits for the 2025, 2026, and 2027 financial years in order to comply with international and EU law.
At the same time, the budget law stipulates that state-sector enterprises included in the general government sector have the right not to make payments for the use of state capital, on condition that the portion of profits normally paid as dividends is directed to covering the enterprise’s previously assumed financial liabilities.
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