The state budget program Financing for Emergencies will be increased by another EUR 500 million, making so that the planned funding amount for emergencies exceeds EUR 800 million this year.
Initially it was planned to allocate EUR 26.73 million for emergencies for Latvia’s state budget of 2021. In January, however, Finance Ministry submitted to the government and Crisis Management Council a proposal in which the institution proposed increasing the aforementioned amount by EUR 300 million.
Finance Ministry will ask the government to allocate another EUR 500 million towards emergencies, making it so that the total amount available in this state budget program reaches EUR 826.73 million.
Finance Ministry explains more funding for the program is needed because as of February 15 there was EUR 164,663,939 left of the EUR 326.73 million in this state budget program. However, considering the distribution plans already approved by the Cabinet of Ministers, it means this state budget program has a deficit of EUR 105,312,110.
Additionally, Finance Ministry has already received new requests for funding emergencies. The requests are currently at various stages of coordination. The ministry also expects additional funding requests from other ministries after the conceptual decisions made by the Cabinet of Ministers regarding support mechanisms to help reduce the impact of Covid-19 crisis.
Finance Ministry adds that by increasing appropriations by EUR 500 million, it will also increase the financial deficit of the state consolidated budget.
The ministry reports that Latvia, like other EU member states, is permitted to perform budget support measures on the side of revenue and expenditures to limit the negative effect of Covid-19 on the state economy.
“This means the state budget’s deficit will increase. Under a normal situation it would have led to a breach of budget discipline requirements of the European Union. However, in the current situation countries are permitted to not follow budget discipline requirements for as long as necessary to overcome Covid-19 outbreaks and their negative social-economic influence,” the ministry admits. (BNN/Business World Magazine)