Speaking tot he BNS newswire Thursday, Dombrovskis, Vice-President for the Euro and Social Dialogue, said serious screening of the requests for extra allocations in the Latvian national budget for 2016 is required to see to what extent those requests can be granted.
Due to the economic slowdown, it was obvious that the amount of additional budget requests to be satisfied in the 2016 budget had to be smaller than in case of the original scenario anticipating economic growth in the country, he said.
Because of the Russia-Ukraine conflict, the economic activity is slowing down throughout the region, and the effects are felt also in Latvia, Dombrovskis said. According to the forecasts made last year, Latvia was expected to show a 4 percent economic growth this year but now the forecast has been halved to 2 percent.
"This will affect also the tax revenue. We need to see what the budget capacity will be next year. A rise in tax revenue is still projected but a review [of the budget requests] will be required,” he said.
Latvia will need to finance different priority measures, and the government will have to determine whether there will be enough money in the budget for those measures or some of the current expenditure have to be revised, the European Commission Vice-President said.
A spokesperson for Latvian Prime Minister Laimdota Straujuma told BNS that the government had no intention of cutting the existing financing to any sector when drafting the next year’s budget.
"There will be no budget cuts. Simply every request for extra allocations will be examined thoroughly and, most probably, the ministries will have to revise distribution of their internal resources,” said the spokeswoman, Aiva Rozenberga.
The Latvian ministries and state institutions have requested 546.864 million euros in additional allocations for the new policy initiatives in the next year's budget.
