Last week, Latvia’s Cabinet of Ministers approved the 2017 national draft budget, with revenues forecast at EUR 8.066 billion and expenditures at EUR 8.367 billion. In comparison to last year, revenues are expected to grow by 664 million euros, with spending rising by EUR 681 million.
A revision of budget expenditures has provided an additional 60 million euros for government initiatives and priorities in various sectors. The Finance Ministry says that the government plans to revise the budget regularly in future.
Healthcare funding is to be increased by EUR 64 million next year. The planned increase is part of overall reforms in the healthcare system, and the extra funding has been secured through a special agreement with the European Commission, which has allowed Latvia to increase its budget deficit by 0.1% of GPD to spend an additional EUR 34.3 million on healthcare.
Latvia’s defence budget is expected to grow by EUR 98 million in 2017 to 1.7% of GDP. Funding for education will be raised by EUR 11 million, according to the Finance Ministry, which also says that EUR 47.2 million will be provided for teacher compensation reforms. Social care financing that is related to pensions and social benefits will increase by EUR 197 million, while budget expenditures on law enforcement and security will grow by 80 million euros. EUR 19 million have been designated in the draft budget for demographic measures, including an increase in family benefits for the fourth and each successive child from EUR 34.14 to EUR 50.07 per month. The minimum wage will rise from EUR 370 to 380 in 2017.
In accordance with the government’s medium-term budget framework, Latvia’s budget deficit is planned to be 1.1% of GDP in 2017, 1% in 2018 and 0.7% in 2019. Latvia is also planning for a fiscal reserve equal to 0.1% of GDP in 2017.