In case of budget belt-tightening, the main thing is that security, education, health and national competitiveness do not suffer

He admitted that if the state’s financial plans are not fulfilled and the economic situation makes it necessary to tighten the budget belts, then it can be done both this year and next year, but the most important thing is not to suffer the mentioned priority areas.

Rinkēvičs also added that he was very unpleasantly surprised by his visit to the Latvian Ethnographic Open-Air Museum this week. “There, to tell the truth, the basis of the national identity of the people, those stocks are in a simply insane situation. There has been no investment there for decades. And if at one point something happens, then we will again hold our heads and whine, where were we for 30 years, when we did not allocate means to protect those various types of 18th, 19th, early 20th century stocks,” said the country’s first person.

At the same time, he admitted that he does not know how to objectively review the entire field so that it does not happen that the one who shouts the loudest gets more money. Rinkēvičs believes that finding this balance is the competence of the responsible minister of each sector, and at the same time the president is aware that it is not easy. “I know that you will never be able to give everything to everyone, but you have to try to understand, at least in some planned order, that there are some things that need to be done, and then, of course, some very new, beautiful, good things come,” said Rinkēvičs .

He summarized that there is still an extremely large imbalance in various sectors in Latvia.

On the other hand, as recommendations for more successful attraction of investments, Rinkēvičs mentioned promoting lending and reducing bureaucracy, stressing that the latter does not require large financial investments at all.

As reported, this year the government’s budget deficit will increase significantly and reach 2.9% of the gross domestic product (GDP), approaching the Maastricht limit of 3% of GDP, according to the draft Latvian Stability Program for 2024-2028 prepared by the Ministry of Finance (FM). which was approved by the government on Tuesday.

The FM informs that the year 2024 is characterized by the recovery of growth, a rapid decrease in inflation, the stabilization of energy resource prices, a stable labor market and, in general, indicates the resilience of the national economy against external economic shocks. Although the budget deficit of the general government is close to the 3% of GDP limit, most of it is made up of one-time expenses related to the internal and external security of the country.

At the same time, the structural deficit is close to the limit of 0.5% of the GDP, and therefore the national debt is sustainable, says the FM, noting that investments in the field of internal and external security are necessary – both to ensure the safety of the country’s citizens and to create the necessary conditions for economic development.

In the view of the FM, it should be expected that slower economic growth at the same time as lower inflation will reduce the tax revenues of the state budget. This, together with the need to allocate significant funding for defense and internal security, has created some tension in public finances, the ministry says.

As the Ministry’s current forecasts show that significant expenditure-reducing measures will not be necessary, it should be expected that additional expenses will be allocated in the next year’s state budget only if additional funding sources are found.