More and more state funds are being spent not on priorities, but on servicing the rapidly growing public debt.
Social partners are still dissatisfied with the draft budget-2026, primarily because the authorities have not found the strength and desire to radically cut expenses, including administrative ones. "Today, October 3, a meeting of the sub-council on budget and taxes of the National Council for Tripartite Cooperation (NCTC) took place. The Latvian Confederation of Employers (LCE) supports increasing funding for national security and defense, but LCE cannot support the overall budget preparation policy for 2026, as the government did not take into account the recommendations of social partners and did not ensure social dialogue," the statement from the Latvian Confederation of Employers reads.
"In January 2025, LCE, together with cooperation partners, insisted on cutting expenses by at least 850 million euros and the need to implement a review process of structured budgets of ministries. The ministries found only 101 million euros in their budgets, failing to even reach their own target of 150 million. At the same time, the materials used in public communication about reducing expenses are misleading and interpret achievable goals (including last year's figures, additional tax revenues, which reduced subsidies to municipalities). Unfortunately, the government did not heed the recommendations and chose the easiest path - the savings in expenses are equivalent to the amount saved annually, and the review of ministry budgets was left to the discretion of the ministries themselves, and therefore the result was not achieved.
The state budget requires increasing funds not for priorities, but for maintaining public debt. The servicing of public debt will increase by 713 million euros over the next three years. Since 2016, the government has not even attempted to balance budget expenditures, and now it has made an irresponsible decision to act similarly for the next three years.
LCE cannot support the principle used in the budget development - "additional taxes today, we will save tomorrow." In the current draft budget, the tax increase for entrepreneurs comes into effect as early as 2026, while savings and reforms in the government sector are planned for 2027. The limitation of allowances and the abolition of bonuses in the public sector are also planned only from 2027," stated LCE President Andris Bite.
However, the position of social partners is unlikely to significantly influence the ruling coalition - no radical revision of the draft budget-2026 is planned.
