RIGA - The government should be very cautious with spending when planning the budget for 2025, Bank of Latvia President Martins Kazaks said at a government meeting on Tuesday.
He explained that according to the Bank of Latvia's forecasts for both 2024 and 2025, there is a high risk that the budget deficit could exceed the 3 percent of gross domestic product (GDP) threshold, so spending should be limited.
Kazaks also urged the government to talk to the European Commission (EC) early on, explaining that defense spending is rising due to the geopolitical situation.
Kazaks also called for a limit to the increase in public sector wages, which have risen by 18 percent in the first seven months of this year. Kazaks stressed that such a sharp rise in public sector wages was "dragging along" the private sector, thus worsening its competitiveness.
"Such a sharp rise in wages must not continue," Kazaks stressed.
The President of the Bank of Latvia also drew the government's attention to the fact that there are major risks to the timely implementation of European Union (EU) structural fund investments. Kazaks also pointed out that caution should be exercised with regard to the growth of public debt.
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