Parliament adopts deficit-cutting budget

  • 2000-12-07
RIGA (BNS) - The Latvian parliament on Nov.30 adop-ted the national budget for 2001, which provides a budget deficit of 1.7 percent of gross domestic product.

The motion was carried by a 67-32 vote with no abstentions.

Under the budget revenues are planned at 1.436 billion lats ($2.297 billion) and expenditures at 1.503 billion lats.

The fiscal deficit is planned for 73 million lats or 1.7 percent of GDP.

The largest increase of budget expenditures next year is planned for integration into the European Union as well as for education needs. Defense spending will increase slightly to about 1.3 percent of GDP.

The budget is based on forecast GDP growth at 4.4 percent and inflation rate of 3.5 percent.

With the budget, Latvia has inched closer to its agreement with the International Monetary Fund to keep the budget deficit under 1 percent of GDP.

Regarding tax revenues, a large growth of revenues from the excise, corporate income and value-added taxes is planned.

Revenues to special budgets are expected to increase considerably due to mandatory social insurance contributions by 22 million lats or 5.1 percent without deductions for state-funded pensions in the amount of an additional 5.9 million lats.

No tax rate increases are planned for next year.

The social insurance contribution rates applicable to employers will be reduced by 1 percent as of 2001.

Under next year's budget the maximum national debt at the end of 2001 is estimated at 720.1 million lats.