To meet the new (EC) criteria of the European Commission, expenditure has to be reduced by about € 300 million, the 'Nothing Personal' program has been announced on Sunday.
When the financial crisis came to an end, the member states of the European Union agreed in 2011 to follow a stricter discipline that reminds one of the program. The supervision was transferred to the EC, which in the future ensured that the countries spend more than was allowed.
National budgets are assessed by the EC on the basis of two criteria. So far, the criterion of the structural balance was the most important, which meant that countries should not exceed the permitted deficit threshold. As the economy grows, the state can spend more. This step was favorable for Latvia, because with the economic growth expenditure could be increased annually, explains Nekā personīga.
The second EC evaluation criterion focuses on national expenditure. That is, it does not allow governments to increase their spending in a time of rapid economic growth, but to align spending in the next 10 years with the average gross domestic product. For Latvia, this indicator is around 2.5%.
The EC, which has updated the second criterion, which is not profitable for Latvia, since all revenues of more than 2.5% of the increase must be aimed at covering public debt, explains the program.
EC representative Economic advisor Mārtiņš Zemītis says for the program that the fiscal scope of 2019 in Latvia is actually being depleted. In addition, the EC warned Latvia in the spring about the risks arising from both criteria.
Minister of Finance Dana Reizniece-Ozola (ZZS) complains about the random change of criteria by the EC. "We are currently consulting with the EC on the methodology used in the evaluation of the budget Last year, both the budget for 2018 and the budget for the three years were agreed, for which the balance sheet condition was used and our budget as fully relevant. has been assessed, one of the best In the EU, however, the EC voluntarily decided this year that it would prefer to take into account the condition of growth of expenditure, but without any objective justification, which is not favorable in the case from Latvia, "said the minister.
Zemītis points out, however, that the EC applies to Latvia and other Member States. Therefore, Latvia can not assume that it will, by way of exception, offer the possibility of drawing up a budget according to the structural balance criterion.
"Nothing personal" reports that the Ministry of Finance has been aware of the changes since May, but has not publicly warned about the next austerity measures.
If Latvia does not comply with the EC criteria, the commission may initiate the infringement procedure and impose a contribution of 0.2% of the gross domestic product guarantee to Latvia until the violation has been corrected. They are about 60 million euros.
It is said that the budget for 2019 of the Ministry wants to find an extra 1.1 billion euros.