Latvia records 128m euro deficit in budget

 According to the State Treasury's preliminary data, financial deficit in the 2013 consolidated total budget was 128 million euros,

Labor taxes collected in December had a crucial role in achieving smaller budget deficit, a Finance Ministry statement shows. 

The figure is 31 million euros less than the Finance Ministry had anticipated. Revenue from labor taxes in December 2013 was 16 percent higher than the average labor tax revenue in December of 2012 and 2011. At the same time, the annual tax revenue growth pace, although still positive in 2013, was about twice slower than in 2012 and 2011, notes the Finance Ministry.

Thanks to higher labor tax revenues in December, state special budget's deficit was 57.9 million euros and municipal budgets deficit was 119 million euros.

The state master budget had surplus of 70.2 million euros at the end of 2013 - which is about as much as the ministry had expected and a slight improvement on the 2013 state budget law's projection for 2013. The surplus in the state master budget was mostly thanks to higher tax revenues and smaller than projected spending on subsidies and government debt servicing, indicates the Finance Ministry.

The ministry predicted previously that master budget spending would be growing faster than revenue in 2013, and this prediction proved true. In 2013, spending increased significantly in such areas as social benefits, payments into the European Union's budget, subsidies for public transport companies. On the other hand, thanks to particularly favorable interest rates government debt was successfully refinanced in 2013.

State and municipal funding for projects co-financed by the EU last year was about the same as in 2012, and part of EU funds were not absorbed. This proves that more effort needs to go into absorption of EU funds in the next few years, believes the Finance Ministry.

The official data on the 2013 state budget will be released after the Central Statistical Bureau submits its 2013 state budget report to the EU's statistical office "Eurostat".