Latvian government okays draft budget for 2023

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On Tuesday, February 7, the government supported the draft law for the State budget for 2023 and budget framework for 2023, 2024 and 2025, which projects revenue of €12.721 billion for the consolidated budget for 2023, and spending of €14.673 billion, LETA reported.

Compared to the 2022 budget, the 2023 budget projects a revenue increase of €2.025 billion and an increase in spending of €2.233 billion.

The general government deficit for 2023 is planned at €1.95 billion, or 4.6% of gross domestic product (GDP).

The maximum government debt ceiling is €19.2 billion, or 45.6% of GDP.

Revenue from the general government budget is projected at EUR 8.796 billion in 2023 and expenditure is projected at EUR 10.861 billion (gross). The increase in expenditure on the general government budget compared to 2022 is EUR 1.564 billion, or 16.8%.

An increase in expenditure of €1.383 billion is earmarked for spending on funding basic national functions. On the other hand, the planned funding of the European Union's (EU) policy instruments and other projects and measures co-financed by foreign financial assistance represents an increase of €181.1 million.

The government's priorities in forming the budget this year, according to the Finance Ministry, are 'economic transformation', security, education, energy, competitiveness, quality of life and health. 

In the medium term, the Security priority foresees additional funding of more than €1.1 billion, including outside the fiscal area for one-off investments to strengthen national security services and capacity for 2023 €354.1 million (0.8% of GDP), €384.5 million (0.9% of GDP) for 2024 and €350.6 million for 2025 (0.7% of GDP)).

Additional funding of €62.3 million has been earmarked for priority actions in the field of foreign policy for 2023-2025.

For the priority Quality of life, human and public health, the second largest increase in funding is planned after the “Security” priority. In the medium term, additional funding of more than €600 million (€161.5 million for 2023, €223.2 million for 2024, €224,9 million for 2025) is being channelled to this priority. The majority of this is allocated to the health sector, followed by the strengthening of public administration capacity and support to increase minimum income.

Over the medium term, more than €170 million (€45.1 million for 2023, €60.3 million for 2024 and €67 million for 2025) is being channelled to the Education priority. The funding is intended mainly for higher education, science and research, to compensate for the increase and to develop the science learning process.

The Energy priority is founded on the basis of EU funds and the Recovery and Resilience facility. Consequently, additional public budget investments are relatively small at the current stage. 

The Competitiveness priority is linked to improvements in many areas. In the medium term, additional funding of €367 million (€71.2 million for 2023, €148.5 million for 2024, €147.5 million for 2025) is being channelled to this priority.

The 2023 budget and medium-term budget framework is planned to be submitted to the Saeima for viewing on Thursday, February 9.

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