Prime Minister Evika Siliņa (New Unity) is calling on ministries to be proactive and come forward with their own proposals for possible budget savings.
Following a coalition coordination meeting, Siliņa told LETA that Finance Minister Arvils Ašeradens (New Unity) is responsible for clarifying the reallocation of budget funds. She emphasized that she expects a concrete proposal from the minister to be presented at a Cabinet meeting.
According to Siliņa, the first round of talks has already concluded, and the second round is now underway — involving active consultations with several ministries to identify solutions for securing the needed 150 million euros.
Siliņa acknowledged that this is not a simple task and stressed that full engagement and cooperation from the finance minister with other ministries is essential.
At the same time, she urged the ministries themselves to be proactive and propose their own ideas for savings. In her view, this approach could lead to a more balanced solution, as top-down initiatives are not always well received.
The Prime Minister expressed hope that ministers would present their own initiatives, as this would allow each of them greater flexibility to find the most suitable solutions within their respective sectors.
As previously reported by LETA, the Ministry of Finance is expected to present proposals in June for reducing state spending.
During June, the Finance Ministry must prepare proposals to cut public spending by at least 150 million euros to free up funds for defense, education, and demographic policies.
Finance Minister Ašeradens has previously stated that in the coming years, there is potential to identify 450 million euros in savings within the public sector to fund defense. This would involve reallocating resources to other priorities without increasing the overall budget size.
He explained that two scenarios are possible: a “flat cut” where all ministries and agencies are required to save 5% and must determine how to achieve this themselves, or a “structural” scenario where savings are found in specific sectors or through specific reorganizations.
During an extraordinary Saeima session on Latvia’s Fiscal Structural Plan for 2025–2028, Ašeradens said that fiscal policy in the coming years must ensure that national debt does not exceed 55% of GDP. At the same time, the budget deficit must be reduced to 1.5% of GDP by 2029, which will require significant reductions and efficiency improvements in public spending over the next three years.
Ašeradens stated that the public sector must save at least 450 million euros in the coming years. This will require downsizing public administration, discontinuing certain functions, merging state institutions, and possibly even merging some ministries.
The finance minister also noted that tax revenues in the first quarter exceeded forecasts by 54 million euros, while acknowledging that overall tax revenue performance this year might only reach 99% of the forecast.