The draft budget foresees additional funding for priority measures related to national security, ensuring the enforcement of the Constitutional Court judgment and laws, independent institutions and measures related to tax policy changes.
In general, it is proposed to finance the priorities for the year 2025 in the amount of 474.438 million euros, for the year 2026 in the amount of 475.2 million euros, for the year 2027 in the amount of 487.8 million and for the year 2028 in the amount of 428.9 million euros.
In order to find the necessary funding in the amount of EUR 474.438 million for the priority measures planned for the next year, compensatory measures are planned. In the following year, public sector expenses were reduced by 330.7 million euros and budget revenues increased by almost 156.8 million.
Minister of Finance Arvils Asheradens (JV) informs that an opportunity has been found to ensure the internal and external security needs of the country – for the priority measures of the Ministry of Defense and the Ministry of the Interior, as well as for strengthening cyber security. In a situation where the European Central Bank continues its policy of limiting inflation and the national economy develops more slowly, changes in labor tax policy will be an additional stimulus for economic growth, Asheraden believes.
In 2025, it is planned to allocate 3.565 million euros to the activities of independent institutions. 36.98 million euros are planned for ensuring the execution of the judgment of the Constitutional Court and the law. Of these, 30 million are earmarked for those working in the field of education, 6.434 million for support for increasing the minimum income, and 545,800 euros for the introduction and maintenance of the electronic monitoring system.
This year, on June 18, the Cabinet of Ministers adopted a decision on the priority development directions of the medium-term budget, setting national security as the only priority development direction of the medium-term budget in the preparation of the draft law “On the state budget for 2025 and the budget framework for 2025, 2026 and 2027”. In 2025, it is planned to direct the most significant part of the additional funding to priority measures related to national security, which amounts to a total of 284.3 million euros.
Most of it, or 167.4 million euros, is intended for the measures of the Ministry of the Interior, for example, 90.07 million euros for officials of the Internal Affairs Service and Prisons Administration with special service ranks, as well as for increasing the salary of the Tax and Customs Police Department of the State Revenue Service by 10%, but 65 million euros in support of Ukrainian residents in Latvia.
Also, for 4.806 million euros, it is planned to extend the operation mode of the enhanced border guard system, and for 4.307 million euros, it is planned to ensure the purchase, updating and maintenance of the state’s material reserves. Another 3.192 million euros are earmarked for taking over the function of escorting arrested and convicted persons from the State Police to the Ministry of Justice.
On the other hand, 90.3 million euros are planned to be allocated to the activities of the Ministry of Defense. Of these, 50 million euros are intended for support to Ukraine in accordance with the concluded agreement on military support. On the other hand, 23 million euros for replenishment of ammunition stocks and provision of individual equipment.
Another 15 million euros are earmarked for the purchase of additional radars for the development of wind farms, while 2.25 million euros are earmarked for the improvement of the access road to the “Selia” military landfill and the reconstruction of the Unity bridge in Daugavpils for improving mobility (from EU funds).
An additional 5.06 million euros are earmarked for strengthening the priority areas of the State Security Service, and 5.02 million euros for ensuring the operation of the Office for the Protection of the Constitution.
Strengthening the basic functions of the emergency medical assistance service, including 2.644 million euros for emergency preparedness.
It is planned to direct the financing of the program of the 2021-2027 planning period of the European Union funds to the necessary strengthening of cyber security in almost all departments.
A total of 12.458 million euros have been earmarked for strengthening cyber security. Among them, 5.005 million euros are allocated to the Ministry of the Interior for strengthening cyber security, the Ministry of Finance – 2.49 million euros, the Ministry of Smart Administration and Regional Development – 1.7 million euros, the Ministry of Culture – 1.295 million euros, the Ministry of Foreign Affairs – 877,294 euros, the Ministry of Health – 827 186 euros, 150,000 euros for the Ministry of Agriculture and 110,640 euros for the Ministry of Welfare.
It is proposed to include several fiscally neutral measures in the budget. The Ministry of Welfare plans to improve the pension indexation mechanism by revising the amount of the state pension or its part, which does not exceed the amount of the previous calendar year’s average insurance contribution salary in the country (currently 50% of the previous calendar year’s average insurance contribution salary in the country).
On the other hand, in the field of the Ministry of Health, it is expected to approve a measure for the improvement of healthcare services in oncology and other diseases that urgently require continuing therapy, in the amount of 21.6 million euros. Funding for the improvement of oncology services in 2025 is expected to amount to no less than 16.9 million euros.
The labor tax change proposal envisages an increase in the net income of approximately 95% of employees, or all those whose gross salary is up to 4,000 euros per month, with the largest increase directly for employees with a salary of up to 2,500 euros.
Taking into account that the planned tax policy changes will have an impact on local government budgets, a special grant of almost 149.6 million euros has been planned for local governments to perform autonomous functions.
In addition, other compensatory measures are planned, such as the reduction of public sector expenses by limiting the monthly salary increase for elected officials and officials appointed by the Saeima (up to 2.6 million euros during the year), as well as by horizontally reducing the expenses of ministries and other central institutions (50 million euros). Similarly, 35 million euros were found by reviewing the expenses of the general budget, and almost 16 million – the expenses of the special budget.
It is also planned to find additional funds to ensure the fiscal needs of the country’s national security, by introducing a solidarity contribution to credit institutions for a fixed period. With this, in 2025, it is planned to increase contributions to the state budget in the amount of 96 million euros.
Taking into account the difficult situation related to the updated medium-term macroeconomic development forecasts for 2024-2028, the negative fiscal space for 2025 and minimal future years, the government previously decided to approve the basic principles for the supported priority measures for 2025, 2026, 2027 and 2028 and continue negotiations on priority measures to be included in the state budget bill.
The approval of the draft state budget for 2025 and the budget framework for 2025, 2026 and 2027 in the Cabinet of Ministers is scheduled for October 14 this year. On the other hand, the 2025 budget bill package is expected to be submitted to the Saeima on October 15 of this year.
2024-09-20 05:43:50