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Latvian government coalition starts talks on 2017 budget

Xinhua, August 11, 2016 Adjust font size:

Latvian Prime Minister Maris Kucinskis met with representatives of the tripartite center-right coalition on Wednesday to discuss the framework and priorities of Latvia's 2017 budget, local media reported.

The Finance Ministry informed that 70 million euros(78.23 million U.S. dollars) would be available for various extra allocations in next year's budget. This amount does not include 35 million euros earmarked already earlier for the health sector and roughly 27 million euros designated for education reforms.

"We have taken a certain step ahead and come to a rough agreement on a fiscal space," Kucinskis told reporters, adding that the next step would be to identify the priorities that the government might afford to finance next year.

During Wednesday's talks, the prime minister had separate meetings with representatives of his centrist Greens and Farmers Union, the center-right Unity party and the right-wing National Alliance.

The total value of the allocation requests submitted by ministries exceed 800 million euros, which is substantially more than the 70 million euros available for these purposes. Most probably, a sizable portion of this money will be allotted to the Defense and Interior Ministries and spent on various defense and security programs.

The Welfare and Finance Ministries are currently at odds over a proposal to raise the minimum wage, which would mean significant expenses both for the central government and municipal budgets. Welfare Minister Janis Reirs has proposed raising the minimum monthly pay from the current 370 euros to 407 euros, which in Finance Minister Dana Reizniece-Ozola's opinion would be an excessively steep increase.

Furthermore, the Center for Demography Affairs is likely to seek 20 million euros in the 2017 budget for various family support initiatives, including larger government benefits for families with four or more children.

Next year, the government plans to raise budget revenues primarily by clamping down on shadow economy, but there are also plans to abolish some tax rebates. Politicians from the ruling parties have also hinted that the so called solidarity tax, which is charged on salaries exceeding 4,000 euros a month and has been strongly criticized by entrepreneurs' organizations, could be either abolished or modified. Endit