Saeima conceptually approves Latvia's 2023 budget

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On Friday, February 17, the Saeima approved the draft law on the State Budget for 2023 and the Budget Framework for 2023, 2024 and 2025.

Revenues in the State consolidated budget for 2023 are expected to amount to EUR 12.721 billion, while expenditure amounts to EUR 14.673 billion.

53 members voted in favor of the budget, and 42 members were against it. The most debated issues were reforms of school and hospital network.

The final reading of the budget is scheduled on March 8 and the budget law should enter into force on April 1.

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

The increase in revenue and expenditure in the Ministry of Finance is explained by the geopolitical situation in the region, as well as the government's commitment to support Latvian residents with partial compensation for energy price increases and the planned support for Ukraine in the fight against Russian aggression.

The general government deficit of 2023, which covers the entire government and local government structure as well as national social insurance institutions, is expected to be EUR 1.77 billion, or 4.2% of gross domestic product (GDP).

On the other hand, the consolidated government deficit is planned at €1.95 billion, or 4.6% of GDP.

The maximum government debt ceiling is €19.2 billion, or 45% of GDP, with public debt projected at €18 billion or 42% of GDP.

During the debate, Finance Minister Arvils Ašeradens said that the government's debt is moderate and allows the government and the country to look forward to the future with confidence; if there is another crisis, Latvia will be able to borrow.

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 spending of €1.383 billion is intended to finance basic state functions. On the other hand, the European Union's (EU) policy instruments and other projects and measures co-financed by foreign financial assistance represent an increase of €181.1 million.

Revenues and expenditures of the national special social security budget are projected at EUR 4.197 billion and EUR 4.083 billion (gross) respectively. The increase in government special budget expenditure against 2022 is EUR 697.9 million, or 20.6%.

Outside the fiscal area, EUR 354 million is earmarked for one-off investments to strengthen national security capabilities and support Ukraine.

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