Information compiled by the State Treasury and published by the Finance Ministry on August 28th shows that in January-July 2025, Latvia’s consolidated general budget closed with a deficit of 419.9 million euros, while a year ago there was a significant surplus of 590 million euros.
The general budget balance is affected by the deficit in the state basic budget, while other budget levels – the state special budget, the budget of derived public entities and the budget of local governments – had a surplus in the first seven months of this year.
“Last year, total revenue grew faster than expenditure, ensuring a positive balance. The growth in foreign financial assistance (FFA) revenue, which exceeded the growth rate of expenditure, played a significant role. In accordance with the FFA repayment cycle, FFA revenue is significantly lower (by 500.7 million euros) in the first seven months of this year, thus increasing the deficit level in the state basic budget,” said the Ministry.
Consolidated budget balance, 2025
Photo: Ministry of Finance
The Ministry of Finance has updated the general government budget balance forecast and the calculation of fiscal space for 2026–2029, taking into account the current Treasury general budget execution data, the updated macroeconomic forecasts and the government’s decisions on increasing spending, especially for defense.
The budget deficit in 2025 is forecast at 2.9% of GDP – 0.2 percentage points lower than forecast in the spring, and in line with the permissible level set by law. It is forecast that in the medium term, along with a significant increase in defense spending, the deficit will increase with unchanged policies and will be: 3.0% in 2026, 4.1% in 2027, 3.7% in 2028 and 3.9% in 2029.
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