The new government in Latvia takes office in the middle of a difficult crisis that will likely continue until next spring, when the snow melts and it will be necessary to pass the state budget for 2023. Then it will be clear if Latvia’s future takes the shape as listed in the three government documents, said University of Latvia Social Sciences Faculty Assoc. Prof. Ojārs Skudra in regards to the first documents approved by coalition parties on Wednesday, the 14th of December.
He noted that the heavy load of the crisis will be successfully pulled largely thanks to the compromise reached by the Combined List (AS) and National Alliance (NA).
«We will see how successfully this goes when the government starts tackling the state budget for 2023,» predicts Skudra.
According to him, the first signal will come at the start of next year, when the Central Statistical Bureau of Latvia will publish its account on results of 2022.
Welfare, healthcare and financial results will either make residents happy or disappoint them, depending on inflation indexes.
Looking at the government’s fiscal discipline agreement, Skudra said it is general and does not include any detailed data in regards to GDP growth rate, import/export balance, inflation, defence expenditures, education and health. He believes the government acted in this way because they were unable to reach an agreement. The other explanation is that the Combined List political party is not prepared to make promises. This is why there are no digits.
The politologist allows that digits may appear once the next year’s state budget is approved. But the new government’s responsibility for economic and social consequences will come into force around April or May next year. This is also when the state budget could be approved.
Skudra says he does not expect the new government to experience any other major challenges aside from the state budget.
As previously reported, members of the coalition – New Unity, Combined List and National Alliance – signed the coalition cooperation agreement on Wednesday, the 14th of December. Members of the government also signed the fiscal discipline agreement and the government declaration for the tasks of the Cabinet of Ministers.
The government declaration mentions, among other things, that the objective of the new government is the transformation of the economy to improve life in Latvia. The document also mentions that in order to enhance the road of development it is necessary to implement a policy that provides Latvia’s residents security and welfare.
In order to accomplish this goal, it is necessary to implement tasks in five mutually related areas: security, education, energy, competitiveness and quality of life, as listed in the government’s plan.
The declaration mentions that people are Latvia’s main treasure and that «all residents should mobilise to ensure economic growth that will improve life for the current and future generations».
Members of the coalition are committed to reducing the general government structural deficit to 0.5% of GDP in 2025.
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