Notification on General Government Budget Deficit and Debt 2007. in October 2007

19.10.2007

According to results of the October 2007 general government budget deficit and debt notification, the general government surplus in 2006 reached 30.8 mln lats or 0.3% of the gross domestic product (GDP) and the general government debt was 1191.7 mln lats or 10.6% of GDP.

In compliance with the requirements of Regulation EC No. 3605/93, the government deficit and debt notification is submitted to the European Commission twice a year, by April 1 and October 1. The results of the notification are used for assessing how the EU member states observe the compliance of the respective economic indicators with the criteria established by the Maastricht Treaty, that is, the ratio of the planned and actual government budget deficit to the gross domestic product (GDP) at current prices must not exceed 3.0% and the ratio of the government debt to the gross domestic product at current prices must not be higher than 60.0%.

October 2007 government budget deficit and debt notification: main indicators

2003

2004

2005

2006

Budget deficit (-)/surplus (+), mln LVL

General government1

-103,5

-75,8

-31,9

-30,8

Central government

-145,1

-144,3

-140,5

-224,4

Local government

-3,4

-8,3

-9,7

-36,4

Social security fund

45,0

76,8

118,3

230,0

General government consolidated gross debt at nominal value at end of year, mln LVL

922,8

1079,8

1130,2

1191,7

Gross domestic product at current prices, mln LVL

6392,8

7434,5

9059,1

11264,7

Per cent of gross domestic product

General government net borrowing (-)/net lending (+)

-1,6

-1,0

-0,4

-0,3

General government consolidated gross debt at nominal value at end of year

14,4

14,5

12,5

10,6

In 2006 budget deficit of the general government remained almost on the same level as in 2005, however, significant changes occurred in sub-sectoral breakdown. For example, central government budget deficit increased by 83.9 mln LVL, local government budget deficit – by 26.7 mln LVL, but social security fund surplus – by 111.7 mln LVL, thus covering central government and local government budget deficits.

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1 Due to inclusion of the construction costs of important investment project - Dienvidu bridge in the calculation of general government, the previously published data on general government budget deficit and debt for the years 2005-2006 have been updated.

The level of budget deficit in Latvia continues to decrease year by year. For example, in 2003 it was 1.6% of GDP, but, compared to 2003, in 2006 it decreased by 1.3 percentage points and reached 0.3% of GDP. The level of budget deficit in Latvia has never exceeded the criterion established by the Maastricht Treaty (3.0% of GDP).

General government budget deficit or surplus by sub-sectors in 2003-2006, % of GDP

Although the level of general government debt in Latvia is growing year by year, it does not exceed the criterion established by the Maastricht Treaty (60.0% of GDP).

General government consolidated gross debt at nominal value, at the end of the year

The government debt ratio to GDP continues to decrease. Compared to the end of 2003, at the end of 2006 it increased by 268.9 mln LVL or 30%, but its ratio to GDP has decreased from 14.4 % at the end of 2003 up to 10.6% at the end of 2006.

On the 22nd of October the EU Statistical Office Eurostat will release information on the results of the October 2007 notification in all EU member states.

Prepared by the Government Finances Section
Tel.: 7366963
Vija Veidemane