Refraining from tax hikes while drafting 2026 budget was big challenge - PM

RIGA - Refraining from tax hikes while drafting Latvia's 2026 budget was a great challenge for the government, Prime Minister Evika Silina (New Unity) said in an interview with TV3 channel on Wednesday.

The prime minister believes that the draft budget strikes a balance between security needs and support for the people. The overall lack of resources for public needs made it a challenge not to raise basic taxes and to look for cost saving measures, the prime minister said.

Silina still expects a big debate on austerity in the Saeima, because in this area there is a lot of public pressure in favor of austerity measures in the public sector, but as soon as concrete proposals appear, there are always strong objections from all sides, as everyone feels that belt-tightening is needed everywhere else except in their particular sector, and a lot of cost saving plans fall through.

Silina estimated that the government had achieved an EUR 800 million cut in budget spending over a three-year period, which is why she disagrees with the business community's criticism that the government has not given enough thought to balancing the budget and streamlining and reorganizing public administration.

The prime minister added that a major reform in terms of cost saving in the coming years is the overhaul of the service pension system, on which she still expects a heated debate in parliament.

Silina is not satisfied with the Culture Ministry's work on more optimal solutions for service pensions, as this ministry has not submitted any proposal to scrap service pensions for any group of people working in creative professions.

The prime minister expects the Culture Ministry to come up with proposals for greater improvements to the service pension system ahead of the reform bill's next readings in the Saeima. The ministry, for instance, should focus more on offering retraining opportunities to the people in creative professions.

Silina admitted that ministers probably lacked the courage and found it difficult to discuss the service pension reform with their respective sectors.