On September 8 the cabinet postponed building the Liepaja prison to 2020 and the plan now is to finish it by 2023.
The Finance Ministry has yet to find above €2m to fund several spending priorities agreed upon both by the coalition and the cabinet. These include support for adoptive families and strengthening foreign policy.
The €117m fiscal space includes €28m to be allocated for the 'third child' policy of giving benefits to parents with many children.
As previously reported, the ruling coalition members last week were still unable to reach agreement on 2018 state budget as the National Alliance wanted a big chunk of the budget to go to demographic measures.
The fiscal space should be €90 million in 2019 and €258 million in 2020 according to Finance Ministry projections.
An extra €144 million will be allotted to healthcare in 2020 to bring healthcare spending closer to 4 percent of gross domestic product.
The government also approved reducing VAT on vegetables, fruit and berries produced in Latvia, despite previous signals it would not do so.