Budget surplus recorded for first half of year

Despite a EUR19.3 million deficit in the Latvian general government consolidated budget in June this year, Latvia closed the first half of 2017 with a budget surplus of EUR 230.7 million, the Finance Ministry said July 31.

The surplus in January-June 2017 was EUR 44.6 million higher compared to the first half of 2016, due to a steeper rise of tax revenues. In the first half of this year, tax revenues stood at 101.5 percent of the target and were by EUR 55 million higher than planned.

Revenue to the Latvian general government consolidated budget was EUR 4.822 billion in the first half of 2017, growing 5.9 percent or EUR 266.9 million year-on-year, and expenditure increased by 6.8 percent or EUR 245.1 million to EUR 3.841 billion. Tax revenue increased by 6.8 percent or EUR 245.1 million compared to the first half of 2016 and reached EUR 3.841 billion.

Expenditure in the general government consolidated budget totaled EUR 4.591 billion in the first six months of 2017, rising by EUR 222.3 million or 5.1 percent year-on-year. Current expenditure grew by EUR 160 million or 10.3 percent due to higher payroll costs and costs for purchase of goods and services.

The central government basic budget showed a surplus of EUR 120.6 million, up by EUR 81.1 million from the first half of 2016. Revenues increased by EUR 146.4 million or 5.5 percent to EUR 2.788 billion due to higher tax revenue, and expenditure grew by EUR 65.3 million or 2.5 percent to EUR 2.688 billion with the most notable rises recorded for current expenditure and capital expenditure.

There was a EUR 12.7 million deficit in the central government special budget in January-June 2017 as revenues rose EUR 51.8 million or 4.6 percent to EUR 1.188 billion, while expenditure reached EUR 1.201 billion, up EUR 52.4 million or 4.6 percent.

The local government consolidated budget had a surplus of EUR 100.9 million which is by EUR 26.9 million less than in the first half of 2016. Revenues increased by EUR 112.2 million or 9.9. percent to EUR 1.244 billion, while expenditure reached EUR 1.143 billion, growing EUR 139.1 million or 13.9 percent.

News of the surplus came against a background of upbeat economic news for the country. Finance Minister Dana Reizniece-Ozola last week managed to push through major tax reforms that take Latvia towards a progressive income tax system from its earlier commitment to flat-rate tax and both retail and GDP data released in the last few days showed positive trends.

"Global and EU economic growth forecasts have been steadily rising since the beginning of the year, with strong economic growth this year in both Lithuania and Estonia and other major foreign trade partners of Latvia, including Sweden and Germany, and the economic situation in Russia is also improving. All this has led to an increase in exports of Latvian goods and services, and the export value of goods at current prices in April and May was by 5.1% higher than a year ago, while exports of services rose by 9.5% over these two months.  

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