Latvia’s state budget program for emergencies will be increased by another EUR 500 million this year, to EUR 1.32 billion.
Initially it was planned to allocate EUR 26.73 million towards this budget program in 2021. In January, Finance Ministry submitted an order to the government and Crisis Management Council to increase this amount by EUR 300 million. In February, the government supported Finance Ministry’s proposal on allocation of an additional amount of EUR 500 million towards the budget program for emergencies, increasing the available funding to EUR 826.73 million.
On March 23, Finance Ministry asked the government to decide on allocation of an additional amount of EUR 500 million towards state budget program for emergencies, making it so that the total amount available in the budget program reached EUR 1.32 billion.
Finance Ministry explained that allocation of additional funds was needed because there was only EUR 324,729,344 of the initially available EUR 826,729,738 available in this budget program as of March 19. Considering the orders from the Cabinet of Ministers regarding approved budget fund allocations, the program suffers a deficit of EUR 220,101,326.
Finance Ministry has received new requests for allocation of finances from this budget program. All requests are at different stages of approval. Additional funding requests are expected from other ministries with respect of decisions made by the Cabinet of Ministers in regards to measures to halt the spread of Covid-19 in the country.
Finance Ministry adds that by increasing appropriations by EUR 500 million the government will also increase the state consolidated budget’s financial deficit.
The ministry reports that Latvia, like other EU member states, is permitted to perform budget support measures both on the revenue and expenditures side to limit the impact of Covid-19 on the state economy.
“This means the state budget deficit will increase. Under normal circumstances it would lead to a breach of EU budget discipline rules. Under this situation, countries are permitted to take budget discipline conditions as far as necessary to limit the spread of Covid-19 and reduce its impact on the economy,” the ministry admits. (BNN/Business World Magazine)
