On Monday, the 13th of February, Latvia’s parliament submitted to committees the legislative draft On State Budget for the year 2023, as well as budget plans for 2023, 2024 and 2025. In this budget plan the state consolidated budget revenue is planned at EUR 12.721 billion and expenditures – at EUR 14.673 billion.
Saeima committees also received accompanying amendments to various laws related to the state budget plan.
Compared with last year’s budget, in 2023 it is planned to
increase revenue by EUR 2.025 billion and expenditures by EUR 2.233 billion.
The Ministry of Finance explains the increase of revenue and expenditures with the existing geopolitical situation in the region, as well as the government’s commitment to support Latvia’s residents with partial compensation of energy resource prices, as well as planned support for Ukraine in the fight against Russia.
Minister of Finance Arvils Ašeradens stressed at a previous government meeting that the expenditures section of the state budget for 2023 is the largest in Latvia’s history. Until now Latvia’s state budgets included expenditures at around EUR 162 billion.
In 2023 the general government budget deficit, which covers the entire state and municipal administration structure, as well as state social insurance institutions, is planned at EUR 1.77 billion or 4.2% of GDP. The consolidated government budget deficit is planned at EUR 1.95 billion or 4.6% of GDP.
EUR 710 million is planned to be spent on various government priorities. An additional amount of EUR 215 million is planned to be taken from the fiscal space to finance various activities in 2023.
Outside of the fiscal space
it is planned to allocate EUR 354 million towards investments into state defence and towards support of Ukraine.
For the education sector the state budget plan for 2023 includes the allocation of EUR 61.6 million to help increase teachers’ wages. The lowest rate for pre-school teachers is set at EUR 1 070 (prev. EUR 970). From the 1st of September onward the lowest wage rate of teachers in general education will be increased to EUR 1 080 for 36-hour work week. To prepare for a full transition to education in Latvian language only, adopt STEM tests and increase the pay for assistant teachers, as well as provide 1st-4th graders with free lunches, it is planned to allocate an additional amount of EUR 8.6 million.
The wage rise for doctors, nurses, assistant nurses and other healthcare workers will continue. Focus will be put on recipients of the lowest wages. There are also improvements planned for child healthcare. This includes provision of cochlear implants and glucose monitoring systems for children with hearing impairment and diabetes, as well as improvement of availability of medicines for patients suffering from cystic fibrosis.
The main sources of additional expenditures for 2023-2025 include the procurement of anti-air defence systems (EUR 600 million), special fire fighting and rescue transports (EUR 166.3 million), creation of a catastrophe management centre for the State Fire and Rescue Service (EUR 103.2 million), as well as establishment of state border infrastructure (EUR 77.6 million).
To support Ukrainian refugees and Ukraine’s recovery, Latvia plans to allocate EUR 77 million. To enhance cyber security and provide residents with necessities in case of threats to the state, it is planned to allocate EUR 40.1 million from the state budget. EUR 19.3 million is planned to be used to provide State Police Riga Region Department with appropriate premises, as well as provide bonus pay for work on holidays for officers with special ranks.
During the preparation of the budget and medium-term budget content there were discussions with the government’s social and cooperation partners, as well as representatives of various municipalities and industry association. As a result of these discussions, an agreement was signed between the Cabinet of Ministers and Latvian Association of Local Governments.
Also read: Fiscal Discipline Council says Latvia’s budget complies with economic situation