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Govt approves state budget for 2016

The Cabinet of Ministers has approved the state budget for 2016 and the mid-term budget for the next three years, Latvian Radio reported on Tuesday. 

Ahead of Finance Minister Janis Reirs briefing journalists Tuesday, the ministry released the main points of the budget plan, revealing revenues planned at €7.368 billion and expenditure of €7.655 billion in 2016.

Revenues are projected to be €114.2 million higher than the planned revenues this year, while expenditure grows by €183.2 million.

The Latvian gross domestic product (GDP) is planned at €26.127 billion at current prices next year.

The budget deficit is planned at one percent of GDP in both 2016 and 2017 and at 0.8 percent in 2018.

Different attitudes towards the new budget were voiced.

Several ministers praised the new budget to Latvian Radio. Minister of Health Guntis Belēvičs said that the new budget is, of course, inadequate, but will allow the health sector to "live through 2016".

While NGOs - the social partners of the government, and especially entrepreneur organizations - were sharp in criticizing the new budget project, saying that it's directed towards increasing taxes for the workforce. 

The state drew the ire of the NGOs as it didn't uphold its promise to reduce the Personal Income Tax and introduced a solidarity tax that removes the ceiling for the State Social Insurance Mandatory Contributions for higher earners.

The Finance Minister, on the other hand, told that "It is the view of the Finance Ministry that the prepared budget fully conforms to the economic situation and the current geopolitics, and [the budget] will still ensure an economy that grows quickly."

On Wednesday, Finance Minister Jānis Reirs will hand the budget for review in Saeima, and it is expected that the state budget will be accepted in the final reading on November 5.

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