Next year's budget in the bag at last

In a special - and predictably epic - Saeima session on Monday, lawmakers approved government spending plans for 2016.

The 100-member parliament adopted the next year’s budget with 61 votes for and 34 votes against.

Revenues to the Latvian central government consolidated budget in 2016 are planned at 7.4 billion euros and expenditure at 7.7 billion euros, with a budget deficit at one percent of GDP.

Latvian GDP next year is expected to total 26.1 billion euros in current prices with economic growth expected at 3 percent.

Revenues to the general government budget next year are planned at 34.3 percent of GDP, expenditure at 35.3 percent of GDP, and government debt at 39.9 percent of GDP.  

According to the medium-term budget framework, economic growth in 2016 is forecast at 3 percent of GDP, while in 2017 and 2018 it is expected to reach 3.6 percent. The budget deficit is planned at 1 percent of GDP in 2016 and 2017, and 0.8 percent in 2018.

The next year’s priorities are Latvia's external and internal security, health care services and education. Additional financing has been granted to the National Armed Forces and for strengthening cyber security as well as for a pay rise to police officers, fire fighters, prison guards ad border guards.

Additional financing has been granted also to healthcare, including 10 million euros for a pay rise to medics, and nine millions have been earmarked for a pay rise to teachers, starting from September 1, 2016.    

Money has been planned in the 2016 budget for increasing the minimum monthly wage to 370 euros from 260 euros currently, keeping the minimum non-taxable income at 75 euros a month. Personal income tax will remain unchanged at 23 percent.

All employed persons, including those working at micro-enterprises, will have to pay at least the minimum state social contributions based on the minimum monthly wage, starting from 2017.

A differentiated non-taxable minimum income depending on total taxable income will be introduced, and large wage earners will have to pay a solidarity tax to be transferred to the central government’s basic budget.

In 2016, excise tax on gasoline and diesel fuel, alcoholic drinks and smoking tobacco, as well as gambling taxes and duties will be increased. The state-oned companies will pay 90 percent of their profit in dividends.      

More than 700,000 euros have been allocated to increase the salaries to the Latvian prime minister, ministers, parliamentary secretaries, parliament faction and committee heads next year.

However, even before the final budget vote, speculation was already mounting that with one of the government's key duties out of the way, Prime Minister Laimdota Straujuma might step down in the near rather than distant future.

"All governments end their terms in office sooner or later, and when it happens in my case, I will inform all of you," Straujuma told reporters at Saeima. 

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