Central bank boss blasts Latvia's budget habits

Latvia is made less competitive with every adopted budget, said Bank of Latvia boss Ilmārs Rimšēvičs in an interview with the Latvian public television Wednesday.

He criticized the Latvian government for being unable to draft a balanced budget in 20 years.

"Instead of a proper budget inventory and a zero-deficit budget once in 20 years, the responsible officials do not want to get down on it. Therefore every year new opportunities to raise taxes are found, making Latvia less competitive every year," the central bank's president said.

Rimšēvičs said that next year's budget is no exception. "Again we have a budget with a deficit, again the external debt is growing, inventory has not been done," he said.

Rimšēvičs criticized the government's approach to changing taxes, saying that Latvia presents an unwelcome picture for people who want to invest or start businesses in Latvia as the "rules of the game keep changing constantly". 

Meanwhile, the Finance Ministry replied that Rimšēvičs had previously called the 2016 budget 'one that can be lived with'.

The Latvian government on September 29 approved the draft national budget for 2016 with a deficit at 1 percent of GDP. The government also approved a bill about the medium-term budget framework for 2016, 2017 and 2018. The budget was sent to the parliament on September 30.

The budget has been drafted setting that priorities next year are the country's external and internal security, health care services and education. Allocations for defense will amount to 1.4 percent of GDP in 2016, 1.7 percent of GDP in 2017, and 2 percent of GDP in 2018.

The economic growth in 2016 is forecast at 3 percent of GDP, while in 2017 and 2018 it is expected to reach 3.6 percent. Budget  deficit is planned at 1 percent of GDP in 2016 and 2017, and 0.8 percent in 2018.

The parliament is likely to hold the first reading of the 2016 budget on November 3 and the final reading on November 30.

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