Notification on General Government Budget Deficit and Debt in April 2007

20.04.2007

According to results of the April 2007 general government budget deficit and debt notification, the general government surplus in 2006 reached 47.4 mln lats or 0.4% of the gross domestic product (GDP) and the general government debt was 1128.3 mln lats or 10.0% 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%.

April 2007 government budget deficit and debt notification: main indicators

2003

2004

2005

2006

Net borrowing (-)/net lending (+), mln LVL

General government

-103,5

-75,8

-19,8

47,4

Central government

-145,1

-144,3

-140,5

-195,7

Local government

-3,4

-8,3

2,4

12,8

Social security fund

45,0

76,8

118,3

230,3

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

922,8

1079,8

1084,5

1128,3

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

-0,2

0,4

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

14,4

14,5

12,0

10,0

Regarding the sectoral breakdown, for already second successive year local governments have posted a budget surplus: in 2005 it was 2.4 mln lats and in 2006 - 12.8 mln lats. The social security fund, in turn, has shown a positive budget surplus in all the years that are included in the notification. The level of budget deficit in Latvia has never exceeded the criterion established by the Maastricht Treaty (3.0% of GDP).

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1
Due to improvements made in the methodology, the previously published October 2006 notification data on general government budget deficit and debt for the years 2003-2005 have been updated.

General government deficit or surplus by sub-sectors in 2003-2005, % of GDP

Although the level of general government debt in Latvia is growing slightly year by year, it does not exceed the criterion established by the Maastricht Treaty (60.0% of GDP). Starting from 2005, the government debt ratio to GDP began to decrease and in 2005 it was 12.0% of GDP and in 2006 it was as low as 10.0%.

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

For the calculation of the April 2007 notification operational data at the disposal of the Ministry of Finance, the Treasury and the Central Statistical Bureau were used; these data will be adjusted after the information for the year becomes available.

On the 23rd of April the EU Statistical Office Eurostat will release informationon the results of the April 2007 notification in all EU member states.

Prepared by the Government Finances Section
Tel. 7366963
Vija Veidemane