Budget, EU – Baltic States, Financial Services, Latvia

Joaquin Almunia and Valdis Dombrovskis.

The commissioner expressed satisfaction on the Latvian government's provisional agreement to reduce next year's budget deficit by LVL 500 million, thus achieving a budget deficit no larger than 8.5% of gross domestic product (GDP). Almunia expects this agreement to turn into next year's budget project, which will be submitted to Saeima this month, writes LETA.

Almunia also praised the government's decision to achieve the necessary budget corrections by increasing revenue because further budget cuts would be too large a burden for residents, especially families with lower income. At the same time, Almunia expressed hope that Saeima will pass the government's budget project, which is important for Latvia to receive the next installment of its international loan, as well as important for Latvia's international financial reputation.

The commissioner also received confirmation from government ministers that the necessary reduction of the budget deficit will be carried out. On the other hand, after a meeting at Saeima today, he was not completely convinced of this that is why he hopes parliament will make the responsible decision. ''If Latvia does not carry out its previously agreed upon commitments, the consequences will be obvious,'' Almunia emphasized, allowing to understand that Latvia would not receive its international loan.

As Prime Minister Valdis Dombrovskis (New Era) told members of the press, in this situation, all political parties must understand the seriousness of the current situation. If the necessary budget is not passed, the situation will only become worse. Latvia needs to pass next year's budget, so that it could continue to receive its international loan and revive its economy.

''The budget is critically important, and we hope that political parties will be responsible,'' said Dombrovskis.

As Dombrovskis informed, the provisional budget project foresees next year's budget deficit to be 7.5% of GDP.