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Latvian Prime Minister to ERR: Our state budget is socially balanced

Latvian Prime Minister Evika Silina visited Estonia on November 8, 2023.
Latvian Prime Minister Evika Silina visited Estonia on November 8, 2023. Source: Ken Mürk/ERR

The Latvian Parliament is discussing the national budget and related legislation. Excise taxes on alcohol, tobacco, and sugary drinks will rise in March. Latvian Prime Minister Evika Silina told ERR that the budget balance, people's livelihood, and export competitiveness had been reconciled.

On Thursday, Latvia's parliament debated the budget for 12 hours, including recesses. There will be no evening session, and the debate will resume on Friday.

"Not everyone is pleased with everything, but the government has laid out its objectives: internal and external security, health and education. We have found more money to help older people solve their work-related challenges. We pay more to retirees who have worked for a longer time. So I think the budget is (socially) quite well balanced," Latvian Prime Minister Evika Silina said.

In financial terms, the state budget is in deficit by 3 percent.

Following months of deliberation, it was resolved on Wednesday, ahead of the budget debate, to refund mortgage borrowers for 30 percent of their mortgage interest if the outstanding sum is less than €250,000.

"The parliament decided that everybody who signed a mortgage would get 30 interest payments. This can be seen in a number of ways. Of course, the rise in interest rates has been unexpected. As a result, parliament's decision to help borrowers in navigating this tough circumstance is appropriate. However, we are currently debating with the European Commission how well targeted the support is. Are we helping people in need? In the current case, everyone benefits from the measure," Latvian Finance Minister Arvils Ašeradens said.

Excise levies on alcohol and tobacco will be raised more than expected. From March 1, a pack of cigarettes will cost 49 cents higher, while a liter of spirits will cost about 70 cents more. Sugary non-alcoholic beverages will see a four cent increase per liter. Latvia has historically made a priority of maintaining competitive excise duty levels in comparison to its neighbors.

"Of course, every source of revenue, including cross-border trade, is vital to us, and every euro is important. But, as finance minister, I am more concerned with how our companies can add value to their products so that they may be exported around the world. On the other side, when it comes to our people's health, Latvia is in bad shape. You are better off in Estonia, but I believe the moment has come for the Baltic countries to consider how to reduce the use of harmful to health products," said the Latvian finance minister.

It was recently decided that VAT on fruits, vegetables, and berries in Latvia will be raised from 5 percent to 12 percent, remaining below the usual rate of 21 percent for another year.

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Editor: Aleksander Krjukov, Kristina Kersa

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