RIGA - The Cabinet of Ministers, at an emergency meeting on Dec. 6, approved the draft 2011 state budget and a medium-term macroeconomic development and fiscal policy framework for 2011-2013, reports news agency LETA. The document projects consolidated budget revenue for next year at 5.1 billion lats (7.2 billion euros), with expenditures at 5.7 billion lats. The budget deficit, calculated according to the international ESA methodology, will be 5.5 percent of gross domestic product, said Finance Minister Andris Vilks (Unity).
Corrections to the budget bill are still possible, because talks with international lenders continue, said Prime Minister Valdis Dombrovskis (Unity).
During work on the budget bill for 2011, the government previously approved increasing standard value-added tax, the excise tax rate on non-alcoholic beverages as of Jan. 1 next year, as well as increasing the minimum monthly wage and other budget consolidation measures. It is currently planned that the 2011 budget will be consolidated by a total of 290.6 million lats.
The draft budget package was ceremoniously handed in to Saeima Speaker Solvita Aboltina (Unity) on Dec. 7. On Dec. 8 the parliament was to begin forwarding the budget to committees. Saeima Budget and Finance Committee Chairman Janis Reirs (Unity) said that parliament should approve the budget by Christmas break. Reirs declined to predict how intense debate will be because the MPs had not yet read the bill, but he did add that surely a point of contention will be the value-added tax, whose basic rate is to be hiked from 21 percent to 22 percent, and whose reduced rate is to be 12 percent instead of 10 percent.
The government plans to collect 5.4 percent more taxes next year, said Vilks. He emphasized that the budget revenue projections are based on the gradual improvement of economic activity in the country, the gradual reduction of the unemployment level, the increase of retail trade levels and the likely improvement of financial results of local companies.
At the Dec. 2 meeting of the National Trilateral Cooperation Council on the 2011 national budget, the Finance Ministry revealed specifics about the budget and planned curbed expenditures for each government ministry.
The Defense Ministry’s budget next year will be cut by 5.5 million lats, which will primarily be brought about by decreasing long-term obligations. The Foreign Ministry is looking at a 300,000 lats cut which will be secured by lowering costs for rental space.
The Welfare Ministry’s budget will have 11.5 million lats less next year, which will come at the expense of the reforms in state benefits for families, cutting administrative costs, and other measures.
The special budget will be trimmed 5.8 million lats.
The Interior Ministry will save 1 million lats by curbing rental of space costs, in order to deal with the planned 3 million lats’ cut in its budget next year, among other steps.
The Transport Ministry’s budget will be slashed 18.3 million lats in 2011 with expenditures on road maintenance to be curbed by 9 million lats, among other measures.
The Culture Ministry is looking at a 1 million lats budget cut next year, and this will be guaranteed by decreasing construction costs for the new National Library. Cutting administrative expenses at various agencies will compensate the 1.3 million lats’ reduction that the Environment and Regional Development Ministry will face.
The Education and Science Ministry’s budget will be 4 million lats less in 2011, and among the measures to be taken is to decrease spending on optimization of professional education institutions.
Reforms in salaries for judges will be key next year for the Justice Ministry, as it faces a 4.7 million lats budget cut. Careful review of spending and curbing expenses for information technology at the State Revenue Service are to be the reality at the Finance Ministry as it looks at a 800,000 lats budget decrease. The same amount will be cut in the Economy Ministry’s budget, and met by optimizing administrative costs and decreasing resources for the Central Statistical Bureau.
Funding for state-compensated medication will be cut by 4 million lats in the Health Ministry’s budget to help meet the total 12.3 million lats slash.
The Agriculture Ministry will have 5.4 million lats less in its budget next year, with the biggest dent to be made in expenditures for subsidies, at 3 million lats.
Belt-tightening is in store for everyone.