While the deficit is set at nearly 140 million lats ($224 million), or 2.45 percent of GDP, Finance Minister Gundars Berzins claims increasing tax revenue will bring the deficit down to slightly more than 1 percent.
IMF officials who were reviewing Latvia's standby loan agreement - which represents de facto approval of a country's fiscal policy - postponed their decision until April 2002 over concerns about the size of next year's budget deficit.
The government and the fund have unofficially agreed to projected deficits of about 1.5 percent for the first two quarters of 2002. If the two still cannot reach agreement in April, the loan agreement will expire.
The budget is based on the assumption that GDP will grow at least 6 percent and inflation 3 percent in 2002. GDP grew by 6.6 percent in 2000.
The state consolidated budget intake is set at 1.52 billion lats with spending, including net loans, at 1.66 billion lats. The maximum level for national debt by the end of 2002 is 860.5 million lats.
The largest spending increase for next year's budget is going to the Welfare Ministry to boost the ailing health care system and pension budget.
Health care financing will receive 19 million lats, while another 11.4 million lats will feed into the pension budget, a move critics have claimed is linked to the upcoming elections.
The budget also reflects international concern about the situation facing ethnic Russian speakers, many of whom do not have a working knowledge of Latvian.
The Society Integration Foundation - charged with folding ethnic Russians into Latvian culture and society - received a 40 percent increase in funding, while bonus payments to bilingual teachers were also boosted.
Big budgetary increases are also linked to Latvia's efforts to join both NATO and the European Union, goals the government considers crucial.
"The national budget adopted by the Saeima once again confirms Latvia's determination to achieve compliance with the political and military criteria of NATO and to be prepared to receive an invitation to join the alliance at the NATO summit in Prague at the end of 2002," said Vilmars Henins, press secretary of the Foreign Ministry.
The state defense program will receive 35 million lats more next year than in 2001, as Latvia, which operates only two transport planes and four helicopters, tries to beef up its military stature.
Latvia's rampant corruption - second only to Romania in Central and Eastern Europe, according to watchdog Transparency International - is also receiving attention. Latvia has founded the state-run anti-corruption task force, with a 400,000 lat budget for next year.
All three Baltic states, along with Poland, Slovakia, the Czech Republic, Slovenia, Hungary, Cyprus and Malta, are hoping to join the EU by 2004 in time for the 2005 EU parliamentary elections.
Please enter your username and password.
2024 © The Baltic Times /Cookies Policy
