Notification on General Government Budget Deficit and Debt in April 2012

19.04.2012

According to the results of the April 2012 general government budget deficit and debt notification1, which has been made in line with the methodology of European System of Accounts ESA’95, the general government deficit in 2011 reached LVL 494.1 million or 3.5 % of the Gross Domestic Product (GDP), and the general government debt comprised LVL 6028.2 million or 42.6 % of the GDP.

April 2012 government budget deficit and debt notification: main indicators

 

2008

2009

2010

2011

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

  General government

-682.4

-1276.7

-1040.4

-494.1

  Central government

-732.2

-733.0

-682.0

-307.5

  Local governments

-203.6

-226.5

-43.2

-60.9

  Social security fund

253.4

-317.2

-315.2

-125.7

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

3 182.3

4 802.8

5 694.6

6 028.2

Gross domestic product at current prices, mln LVL

16 084.7

13 070.4

12 738.7

14 161.0

As % over the GDP

General government deficit (-)

-4.2

-9.8

-8.2

-3.5

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

19.8

36.7

44.7

42.6

Compared to the Treasury provisional data, indicating LVL 444.9 million general government budget deficit in 2011 (3.2% of GDP), the budget deficit, calculated in accordance with the methodological requirements of ESA’952, exceeds the amount by LVL 49.2 million or 0.3% of GDP.

Major adjustments, which have influenced this difference, with negative impact (deficit increase) are:

  • government investments in financial and non-financial corporations – adjustment of LVL 139.5 million or 1.0% of GDP;
  • impact of balance of enterprises controlled and financed by central and local governments and re-classified to general government sector – adjustment of LVL 43.7 million or 0.3% of GDP;
  • adjustment regarding central government budget subsidies allocated to the Latvian Olympic Committee for re-payment of state-guaranteed loans – LVL 23.7 million or 0.2% of the GDP;
  • adjustment of difference between interest accrued and paid – of LVL 20.8 million or 0.1% of the GDP;
  • adjustment regarding claims towards debtors – of LVL 18.0 million or 0.1% of the GDP;
     

At the same time, adjustment with positive impact has been carried out (deficit decrease):

  • adjustment of recording of EU funds acquisition - of LVL 139.6 million or 1.0% of the GDP;
  • tax adjustment using time-adjustment method - of LVL 39.7 million or 0.3% of the GDP;
  • adjustment of state support for biofuel produced in previous years – of LVL 20.0 million or 0.1% of the GDP.
     
General governmnent budget deficit or surplus by subsectors in 2008-2011, % of GDP

In the calculations of notification of April 2012 data from the Ministry of Finance, Treasury, Ministry of Economics, Central Statistical Bureau and Riga City Council are used.
Statistical Office of the European Commission Eurostat will release information on the results of April 2012 notification in all EU Member States on April 23.

Prepared by the Government Finances Section
Vija Veidemane
tel: 67366963
 


1In compliance with the requirements of Regulation EC No 479/2009, 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%.

2The necessity for adjustment arises from ESA’ 95 methodological requirements and guidelines for the production of financial statistics of the government sector. They require that the accrual (instead of cash flow) principle is followed in the calculations, and that financial transaction from government sector balance, as well as influence of European Union funds is neutralized.