Government agrees on basics of 2021 budget in Latvia

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Government parties on Monday, September 21, agreed on the framework for the country's next year's budget, said Prime Minister Krišjānis Kariņš (“New Unity”).

Kariņš said that negotiations over the country's next year's budget had been difficult, but “very interesting.” The country's budget for next year provides for a number of things:

  • From January next year, the minimum salary in Latvia will be €500.
  • €183 million is planned to increase medical salaries in line with the increase approved by the Saeima.
  • More than €40 million is dedicated to raising salaries for teachers and academics.
  • The guaranteed minimum income will be increased from the current €64 to €109.
  • A total of €9 million is dedicated for public media exiting the advertising market.
  • As from 1 January, the compulsory social security contribution rate will be reduced by one percentage point.
  • A mandatory minimum social contribution will be introduced from 1 July; work on details will continue.
  • From 2022, it is planned to introduce reformed and increased state aid for families.
  • The highest threshold for the application of the differentiated minimum will be increased from €1200 to €1800.

Ilze Indriksone (National Alliance) said that the coalition also supported the preservation of the reduced value added tax (VAT) rate for vegetables, fruits and berries local tor Latvia in the coming years. This will be further specified on Tuesday, September 22, when the budget framework is scheduled to be viewed at the government meeting.

Next year's government budget forecasts a deficit of 3.9% of the country's gross domestic product (GDP), Kariņš said.

However, the fine details of the budget still remain to be worked out and the arduous process of getting it passed by Saeima still lies ahead.

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