As is known, no sectoral ministry or central subordinate institution is allowed to form any political priorities for the upcoming year that would entail additional funding. Everything is for the sake of defense! And what about the Ministry of Finance itself against this backdrop?
Holders of the State Treasury
The power of the Ministry of Finance is indeed immense – under the purview of this structure are: the State Revenue Service, the State Treasury, the Lottery and Gambling Supervision Inspection, the Procurement Supervision Bureau, and the Fiscal Discipline Council.
As centralized institutions supervised by the Ministry of Finance, the State Audit Office and the Central Finance and Contracts Agency (CFLA, which oversees all EU financial programs) operate.
For 2026, budget expenditures under the Ministry of Finance are set to amount to 657.4 million euros. The targeted indicators include ensuring tax revenues at 36.2% of the gross domestic product. In the following year, the ministry promises to attract funds from EU funds, the European Economic Area, as well as grants from Norway and Switzerland.
Foreign financial aid, meanwhile, is expected to decrease significantly in the coming years – if it is planned at 719 million euros for 2026, it will only be 232.4 million in 2028.
Nevertheless, all of this, if we are to believe the presentation made by the ministry at the Saeima Budget and Finance (Tax) Commission, is supposed to ensure "the creation of a balanced budget for state development," "support the sustainability of the tax system," and "targeted and stable management of state resources."
Responsible Debtor
The 2026 budget, according to the Ministry of Finance, is "balanced in the economic cycle." The department of A. Asheradens is implementing "effective management of state finances, ensuring the long-term development of state debt" (as stated in the text!).
In terms of servicing debt obligations, the picture is as follows – if in 2025, 507.7 million euros is allocated for "management of state debt," then in 2027, it is planned to be 587.6 million (+15.7%). Further increases are expected:
- in 2027 – 646.9 million (+10.1%);
- in 2028 – 726 million (+12.2%).
Accordingly, over three years, the servicing of state debt (i.e., payments of interest to creditors) will increase by 218.3 million euros, or by 43%.
At the same time, in Latvia, the Ministry of Finance indicated to parliament members that a "responsible, effective, predictable, and competitive tax policy is being implemented, ensuring stable revenues in the state budget."
The European Union Gives Less Than It Takes
As previously noted, the total volume of foreign financial grants for Latvia in 2028 is expected to amount to only 32% of the level in 2026. At the same time, Latvia's own contributions will increase – from next year, the level of 366.9 million euros will rise to 493 million in 2028 (+34%).
Consequently, in the medium term, our republic will transform from a recipient of financial aid into a donor. If in 2025 the difference between inflows into Latvia and what it contributes to the EU pot is 141.3 million in our favor, then in 2028 it will be 260.6 million in favor of the EU!
As consolation, the department of A. Asheradens informed the deputies that it also decided to save a bit – expenditures in the next year will be reduced by 17.108 million euros, or by 8.64%. The main items of cuts include:
- 8.41 million euros – costs for remuneration are expected to be reduced by cutting 9% of positions, not creating new positions, and reducing the variable part of salaries;
- 2.96 million euros – costs for information and communication technologies will "meet minimum requirements without development activities";
- 1.819 million euros – through expenses of the Tax and Customs Police, by canceling planned activities, postponing scheduled purchases, reducing the vehicle fleet, and funding for covert surveillance;
- 1.133 million euros will be saved through operational expenses for premises.
Leave a comment