European Commission approves Latvia's 2019 draft budgetary plan

The European Commission has approved Latvia's 2019 draft budgetary plan, pointing out that the plan is broadly compliant with the Stability and Growth Pact for 2019.

The Commission points out that Latvia in 2018 and 2019 will not deviate much from the medium-term budgetary objective, and the deviation may amount to 0.1% and 0.2% respectively.

At the same time, Latvia is asked to ensure that general government primary spending increase no more than 6% in 2018 and 4.6% in 2019.

According to the Commission, Latvia has achieved limited progress with implementation of the European Council's July 13 fiscal recommendations, and may be urged to accelerate its progress.

As reported, the government approved the 2019 draft budgetary plan on October 15 and submitted it to the Commission.

According to the plan, budget revenue in 2019 is projected at €9.178 billion, or €217 million more than in 2018, while budget expenditures are planned at €9.205 billion - €96 million more than in 2018.

The plan stipulates that defense spending will stand at 2% of gross domestic product, while healthcare spending will increase €154 million to over €1 billion in total. Financing for pensions will increase €10 million.

Financing for road construction and maintenance will amount to €236.1 million. The medium-term budget plan also envisages an increase in teachers' salaries.

The budgetary plan includes not only state budget, but also municipal budgets and many state-owned companies' budgets. Local governments will have the opportunity to borrow funds for implementation of investment projects at record-low interest rates.

The plan also stipulates fiscal reserve of 0.1% of GDP or €31 million. General government deficit is to be reduced to 0.7% of GDP, government debt is projected at 38.5% of GDP (the average government debt in eurozone countries is 84.1%).

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