Budget, Financial Services, Latvia

Einars Repse

This sum of money corresponds to a budget deficit of approximately 4.7% of gross domestic product.

"What I have heard is that we must reduce budget expenditure by LVL 700 million, period. It is our business, how we achieve it, but if we fail to do so, then in the middle of the year we will have to finance ourselves the general budget spending as we will not receive the international loan," Repse warned.

He pointed out: "Further work on reducing state budget deficit is difficult, but I believe that there still are many useless expenses included in the state budget plan, however, former ministers and ministry officials, who have dealt with this previously, could tell more about this."

The "Bloomberg" agency reports that today EU finance ministers decided, Hungary and Latvia, the two European Union members that needed international bailouts to avert defaults, must take more steps to meet their deficit targets. Latvia must ''rigorously'' introduce wage cuts and implement other measures to achieve the deficit target of 5.3% of GDP this year, the ministers said.

This means that the prime minister designate Valdis Dombrovskis' plans of agreeing on a larger budget deficit have not gained support. Dombrovskis proposed reducing budget spending by LVL 280 million, which would mean that budget deficit, would equal 7% of GDP. Still, also other options are being considered.