2017 budget passed in first reading

Saeima passed Latvia's draft 2017 budget in the first reading Monday, projecting budget revenues at €8.066 billion and expenditures at €8.367 billion next year, reported LETA.

The draft budget for next year was passed in the first reading by 57 votes to 33, with no abstentions.

Monday's Saeima meeting and debates continued for six hours with two breaks.

Opposition lawmakers criticized the budget blueprint, saying that it does not give hope for improvement in areas vital to the people and that the measures planned in the 2016 budget would hurt small businesses. Although coalition MPs were far from anonymous on certain issues, they tried to disprove the opposition's arguments against the budget proposals.

Prime Minister Maris Kucinskis (Greens/Farmers) said during the debate in Saeima: "This budget is not suitable for conspicuous metaphors, its ideology is based on the coalition partners' ability and strength to agree on compromises, the willingness to take the first step towards radical reforms in many areas.

We are heading into uncharted territory, because staying put would be pointless. Let's take this first step together!"

The prime minister dismissed claims that the budget lacked a strategy and praised the government for heeding its social partners and constructive criticism.

As compared to the 2016 budget, revenues are expected to grow by €664m and expenditures by €681m next year.

A revision of budget expenditures has provided additional €60m which will be spent on government initiatives and prioritized measures in various sectors. The government is determined to revise the budget on a regular basis also in the future, the Finance Ministry said earlier.

Next year, healthcare funding will be raised by €64m, according to the draft 2017 budget. The increase is being provided in the context of the planned healthcare system's reform. The extra funding has been secured by reaching an agreement with the European Commission, which has allowed Latvia to expand its budget deficit by 0.1% of GDP and spend additional €34.3m on the health sector.

Latvia's defense budget is set to grow by €98m in 2017, to 1.7 percent of GDP. Latvia has committed to raising its defense spending to 2% of GDP in 2018 and 2019, according to its medium-term budget framework.

Funding for education will rise by €11m next year, representatives of the Finance Ministry said, adding that €47.2m would be provided for teachers' wage reform. The Education and Science Ministry is expected to revise its budget to provide €15.7m of that amount.

Financing for social protection, including pensions and social benefits, will grow by €197m next year, while budget expenditure on public order and security will increase by €80m.

Additional €19m have been earmarked in the draft 2017 budget for demographic measures. They include raising the monthly benefit for fourth and each successive child from €34.14 to €50.07.

The minimum monthly wage will go up to €380 from €370 in 2017.

As for next year's budget revenues, €6.344 billion are expected to be collected in taxes, non-tax revenues are projected to reach €513.9 million, foreign financial assistance €1.14 billion and other revenues are projected at €94.2m.

The government intends to generate part of these revenues by clamping down on the shadow economy, with the new measures expected to provide €16m in additional budget revenues.

In accordance with the medium term budget framework, Latvia's budget deficit is planned at 1.1% of GDP in 2017, at 1% of GDP in 2018 and 0.7% of GDP in 2019. Latvia is also planning a fiscal reserve, worth 0.1% of GDP, in 2017.

Latvia's economic growth is planned at 3.5% in 2017 and 3.4% in 2018 and 2019. Employment growth is projected at 0.2% in 2017.

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