Survey: residents think Latvia has large foreign debt

75% of surveyed residents of Latvia believe that Latvia's foreign debt compared to other countries of the European Union is large, according to the SKDS survey commissioned by the Fiscal Discipline Council (FDP), published February 7.

Of those, 36% think that the debt is rather large, and 39% think it is very large. 12% of respondents consider external debt as average and 3% as small.

The FDP noted: these answers point to a lack of awareness among citizens about the state of public finances since in fact Latvia's level of government debt is relatively low. Inna Šteinbuka, Chair of the FDP, pointed out that Latvia is one of the countries with relatively low government debt, which has enabled borrowing on international markets at very low interest rates and widely implementing state aid measures during the pandemic.

“That doesn't mean the government can 'hit the gas' in budget spending. In order to balance the costs that have been rising rapidly due to the pandemic and energy crisis, the increase in debt should be stopped, preventing it from significantly exceeding 50% of GDP, which would be the ideal limit under Latvian conditions,” said Šteinbuka.

For 73% of surveyed residents of Latvia, it is not acceptable that the country borrows money to address current problems, but next generation has to pay for it. A fifth or 19% of respondents generally accept this principle.

51% of respondents have indicated that they are interested in the state of public finances, such as budget deficits, public debt and similar issues but 45% of respondents are generally not interested in such issues.

More than half of respondents, or 59% of respondents, have no opinion on the way in which Latvia should obtain additional funding to increase spending. A quarter of respondents, or 26%, believe that spending should be increased by borrowing and increasing public debt, while 15% of respondents point out that spending should be increased by raising taxes. 

The majority of respondents (84%) in general, agree that countries where people are more trusting and supportive of each other are growing more economically. On the other hand, 71% of respondents agree with the idea that tax avoidance is a reprehensible act.

Given that the FDP regularly prepares Covid-19 crisis monitoring reports on the fiscal situation in the country and 17 such reviews have already been produced over two years, the survey also included Covid-19 issues.

66% agree with the claim that vaccination is a duty to the health of others (33% agree entirely and 33% rather agree). On the other hand, 25% do not agree with this statement. 48% agree that vaccination of Latvian residents against Covid-19 has a positive impact on Latvia's economic development, while 36% of respondents do not agree with this statement.

The survey was conducted in November 2021, involving 1010 respondents aged 18 to 75.

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