Latvia to cut budget spending by EUR 844 million over medium term - Finance Ministry

RIGA - In the medium term - from 2026 to 2028 - Latvia's budget spending is planned to be reduced by EUR 844.1 million by reviewing expenditure and taking optimization measures, LETA was told at the Finance Ministry.

In the revision of next year's budget, the costs of public debt management have been reduced by an additional EUR 10 million per year, which would save EUR 30 million total over three years, the Finance Ministry said, adding that this contributes to the overall consolidation.

The reduction of public spending over the medium term will be gradual. Accordingly, expenditure will be cut by EUR 243.4 million in 2026, EUR 304.6 million in 2027, and EUR 296.1 million in 2028.

In particular, next year's basic budget expenditure is reduced by EUR 50 million, the line ministries have identified and reduced expenditure by EUR 181 million, and a further EUR 12.4 million has been saved in the preparation of the budget bill.

This brings the total spending cut over the three years to EUR 844.1 million, which has been earmarked to finance the priorities identified by the government, the ministry explains.

National security, health, support for families with children, and quality education have been identified as the main priorities for 2026, with an extra EUR 700 million earmarked for these areas.

The Finance Ministry indicates that EUR 448.3 million is planned for strengthening national security next year, including investments in military capabilities, internal security and cybersecurity, the purchase of equipment and machinery, training of soldiers and conscripts, the construction of anti-mobility and border defense systems, the development of the defense industry, and support for municipalities in Latvia's border regions.

Additional funding of EUR 94.8 million in 2026 is foreseen to strengthen support for families with children, improve material support for children in out-of-family care, and strengthen health care. Childbirth allowance is to rise to EUR 600 next year from the current EUR 421.17, and childcare allowance will increase to EUR 298 per month from EUR 171.

Support for guardians and adopters is also set to increase, including the remuneration for guardians, from EUR 54.07 per month to EUR 298 per month, and the one-time payment for adopting a child will grow from EUR 1,422.87 to EUR 2,433. Guardians of children who are not working will be covered by social insurance from the state budget.

In the area of health, additional funds are earmarked to expand state-funded outpatient and inpatient services and to improve access to medicines. According to the Finance Ministry, the range of state-funded medicines will be expanded, up to EUR 10 reimbursement of pharmacists' service fees will be introduced for prescription medicines, and persons with group 1 disabilities be exempt from these fees.

Funding will also be provided for maternal and child health care and family planning services, early diagnostics and treatment, as well as for expanding access to palliative care, including care at the patient's home. In addition, support will be strengthened for rural family physicians.

Additional funding is also earmarked for education to ensure access to quality education for all children in Latvia, regardless of where they live or the size of their school. An additional EUR 45 million is planned for the implementation of the new teachers' pay financing model Program at School, including for support staff.

Next year's draft state budget also includes additional support for other measures, including support for farmers to boost the competitiveness of the sector and ensure access to quality local food products for the population. Additional funding is also planned to provide healthy meals in schools using local produce.

In the area of labor, building on the changes initiated earlier, the tax-free minimum is set to increase by EUR 40 next year to EUR 550 per month. The minimum wage will rise to EUR 780 from EUR 740.

As reported, the Saeima Budget and Finance (Taxation) Committee on Wednesday approved Latvia's draft budget for 2026 and the medium-term budget framework for 2026, 2027, and 2028 for the final reading in parliament, concluding work on next year's budget.

The government on October 14 approved Latvia's 2026 draft budget, with consolidated state budget revenue planned at EUR 16.064 billion and expenditure at EUR 17.945 billion.