Wednesday, February 24, 2021

This year, public debt will not exceed 50% of GDP, according to the Ministry of Finance


This year, public debt will not exceed 14 billion euros or 50% of gross domestic product (GDP), the Ministry of Finance (MoF) acknowledged.

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The Ministry of Finance informed that, based on the Treasury data, the general government debt at the end of 2019 was 11.2 billion euros or 37% of GDP, while in 2020, according to preliminary data, the government debt was about 13.3 billion euros or 47% of GDP. % of GDP.

According to the current indicative forecasts, the MoF assumes that the general government debt will not exceed 50% of GDP or about 14 billion euros by the end of 2021. However, this is only a preliminary assessment based on current assumptions and available information.

The MoF also pointed out that government debt service expenditures are made from the state budget and, in order to reduce the impact of emergency loan servicing expenses on the state budget in the coming years, borrowings are made at the lowest possible interest rates – close to zero and negative.

According to the Law “On the Medium-Term Budget Framework for 2021, 2022 and 2023”, the planned interest expenditure on government debt is planned to amount to 225.8 million euros this year, 207.9 million euros in 2022, and 207.9 million euros in 2023. million euros.

Last year and this year, public debt is growing due to the financing of measures to mitigate the negative effects of the Covid-19 pandemic. All measures are mainly financed from the state budget program “Contingency Funds”.

Last year, a total of about 600 million euros was allocated for contingencies, while this year the government has decided to allocate about 820 million euros for contingencies. It is expected that the funds allocated this year will not be enough, and the government will have to decide on the allocation of additional funds for unforeseen events.

Prime Minister Krišjānis Kariņš (JV) previously described the situation with unforeseen events in the government as alarming. At the beginning of the government session on Thursday, February 18, the Prime Minister touched upon the issue of the budget program “Contingency Funds”, which has funds of over 800 million euros available this year, but the money available in this program is rapidly declining. “What is happening is a worrying trend [pēc šiem līdzekļiem] is beginning to grow in geometric progression, “said the Prime Minister.

Kariņš added that all contingency funds are money borrowed by the state.

It is planned that this week the Ministry of Finance will submit to the government for consideration a report on the situation with the budget program “Contingency Funds” – already allocated and planned funding.





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