According to European Commission's Vice President Valdis Dombrovskis, the deviation has to be limited as Latvia is already using an allowance linked to its pension system.
Representatives of the Finance Ministry explained that Latvia has been allowed to increase its budget deficit by 0.1% of GDP in 2017, or an estimated €35m.
The allowed deviation makes up 0.5% of GDP, but Latvia is already using 0.4% of GDP in relation to the development of the second pillar of the pension system.
In accordance with the European Commission's recommendations, Latvia has to ensure that the deviation from the adjustment path towards the medium-term budgetary objective in 2016 and 2017 is limited to the allowance linked to the systemic pension reform and the major structural reform in the healthcare sector.
The European Commission on Wednesday released its analysis of economic and social challenges in EU member states or the so called recommendations to the member states. HERE is Latvia's.