Government budget deficit was 0.6% of GDP in 2019 in Latvia

Results of the Notification on General Government Budget Deficit and Debt compiled by the Central Statistical Bureau (CSB) in line with the methodology of the European System of Accounts (ESA 2010) were published October 20.

Results show that in 2019 general government budget deficit accounted for EUR 174.2 million or 0.6% of the Gross Domestic Product (GDP) and general government consolidated gross debt amounted to EUR 11.2 billion or 36.9% of the GDP.

General government sector includes all central and local government budgetary institutions, the social security fund and the central and local government-financed and controlled enterprises selected in compliance with ESA 2010 criteria on government sector formation.

General Government Budget Deficit or Surplus and Debt

 

2016

2017

2018

2019

Budget deficit (-) or Surplus (+), million EUR

General government

38.9

-210.7

-236.7

-174.2

Central government

9.9

-227.1

-291.5

-651.2

Local governments

53.6

-74.1

-191.4

186.8

Social security fund

-24.6

90.5

246.2

290.2

General government consolidated gross debt at nominal value at the end of the year, million EUR

10 245.0

10 518.7

10 815.6

11 246.6

As % of GDP

General government budget deficit (-)

0.2

-0.8

-0.8

-0.6

General government consolidated gross debt at nominal value at the end of the year

40.4

39.0

37.1

36.9

As compared to operating cash flow data of the Treasury, where consolidated budget deficit in 2019 was EUR 117.4 million, budget deficit calculated by the CSB in accordance with the methodological requirements of European System of Accounts 2010 is EUR 56.8 million or 0.2 percentage points of GDP more.

Most significant methodological adjustments with positive effect on the general government budget:

  • adjustments in claims against debtors (data of the Treasury) – by EUR 76.9 million or 0.3% of GDP;
  • tax adjustments by using the time adjustment method (data of the Ministry of Finance) – by EUR 69.9 million or 0.2% of GDP;
  • adjustments for exclusion of transactions of derived financial instruments (data of the Treasury) – by EUR 19.7 million or 0.1% of GDP;
  • adjustments of expenditure on construction of the Southern Bridge (data of Riga City Council) – by EUR 19.0 million or 0.1% of GDP;
  • balance of derived public persons and entities non-financed from budget (data of the Treasury) – by EUR 18.2 million or 0.1% of GDP.

At the same time, there have also been adjustments with negative effect on the general government budget:

  • adjustments for balancing foreign financial aid flow (data of institutions involved in administration of foreign funds) – by EUR 123.3 million or 0.4% of GDP;
  • adjustment for super-dividends – EUR 75.3 million or 0.2% of GDP;
  • adjustments for future payments of the 2nd pillar pension scheme funds (data of the State Social Insurance Agency) – by EUR 22.2 million or 0.1% of GDP;
  • adjustments for government investments in central and local government enterprises (data of the Treasury) – by EUR 12.8 million or 0.04% of GDP;
  • adjustment of securities premium in the issue year to ensure recognition of premiums in revenue in the following years until the redemption of securities (data of the Treasury) – by EUR 10.8 million or 0.0 % of GDP;
  • balance of central and local governments reclassified to general government (CSB data) – by EUR 9.7 million or 0.03% of GDP.

As compared to 2018, the general government consolidated gross debt in 2019 grew by EUR 0.4 billion or 4.0% and comprised EUR 11.2 billion.

Eurostat, Statistical office of the EU, will release information on the results of the October 2020 notification in all EU Member States on 22 October.

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