2021 budget is designed for deliberate and planned stimulation of the economy without opening the deficit floodgates - Karins

  • 2020-10-28
  • LETA/TBT Staff

RIGA - The state budget for 2021 is designed for deliberate and planned stimulation of the economy without opening the deficit floodgates, Prime Minister Krisjanis Karins (New Unity) told Saeima today, as debates on the draft budget in parliament begin.

''We are currently living in extraordinary times, when the Covid-19 pandemic is spreading not only in Latvia, but in Europe and around the world. There is no medicine or vaccine against this virus, and is something that humanity has not yet encountered,'' Karins said. He also said that there was no reason to expect a vaccine to become available in the coming months, as this will take longer.

In a situation when people all over the world, including in Latvia, are dying from this virus, it is best to take measures that reduce its spread, Karins emphasized. He pointed out that it is important to reduce social contacts, where MPs are setting an example by organization of their work. Parliamentary sittings are currently partly being held remotely in the e-Saeima system.

The Covid-19 crisis caused a very noticeable economic decline, Karins emphasized. He noted that the government responded by stimulating the country's economy by borrowing money. This strategy has paid off, as budget revenues are now back at or above the planned level and the economy is showing signs of recovery, he said.

As reported, the Saeima has submitted to parliamentary committees the 2021 draft state budget for review, with expenditures planned at EUR 10.76 billion and revenue at EUR 9.58 billion for next year.

According to the government's planned spending, the country's external debt will increase to 48 percent of gross domestic product, which is below the 52 percent allowed by the Bank of Latvia, Karins pointed out. Consequently, it will also be visible at the international level that Latvia has maintained the spirit of fiscal discipline, the head of government explained.