The Ministry of Finance reports that the rapid tax revenue last year assisted with improvement of the overall general budget balance. Nevertheless, the level of expenditures remains high. Data from the State Treasury indicates the year 2022 was concluded with deficit of EUR 1 450.7 million in the consolidated general budget.
Compared with 2021, the general budget balance has improved by EUR 394.1 million. Nevertheless, it remains higher than it was before the year 2020, which is before the first Covid-19 pandemic. The rapid drop in budget balance in 2020 and 2021 can be explained with considerable budget assistance allocated to reduce consequences from Covid-19 pandemic. In 2022, when this support went down, the state presented measures to help reduce energy resource prices and provide aid to Ukrainian refugees.
If the total effect this support had on budget deficit in 2020 was around EUR 1 billion or 3.2% of GDP and in 2021 it increased to EUR 2.1 billion or 6.2%, last year, according to the Ministry of Finance, the provided support increased the general government budget deficit by EUR 1.5 billion or 3.8% of GDP.
Nearly half of this accounts for energy support and support for Ukrainian civilians.
According to the estimate from the Ministry of Finance, EUR 605 million or 1.4% of GDP was spent on energy support measures in 2022. The energy support package was implemented in the amount of EUR 348 million in the previous heating season. This money was used to ensure compensation of electricity, natural gas and mandatory procurement components for all end users (EUR 183 million). Various benefits were also paid to different groups of residents: EUR 20 for seniors and invalids; EUR 50 for families with children (EUR 125 million).
In the current heating season EUR 147.6 million was spent to cover increasing costs on power and centralised heating, as well as compensation of various kinds of fuels for households and businesses. EUR 110 million was paid in various social benefits and to finance faster pension indexation.
Also read: Latvia’s budget deficit in Q3 below average in European Union