Notification on General Government Budget Deficit and Debt in October 2009

16.10.2009

According to results of the October 2009 general government budget deficit and debt notification[1] which were prepared in conformity with methodology of European System of Accounts ESA’95, in 2008 general government budget deficit reached 672.4 mln lats or 4.1% of Gross Domestic Product (GDP) and the general government debt was 3181.4 mln lats or 19.5% of GDP.

October 2009 government budget deficit and debt notification: main indicators[2]

2005

2006

2007

2008

2009[3]

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

General government

-35.5

-51.9

-44.7

-672.4

-1300.0

Central government

-140.5

-230.1

-358.3

-722.3

-732.2

Local government

-13.3

-53.9

-101

-203.5

-300.0

Social security fund

118.3

232.1

414.6

253.4

-267.8

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

1122.4

1189.9

1329.8

3181.4

5392.0

Gross domestic product at current prices, mln

9059.1

11171.7

14779.8

16274.5

12980.9

Per cent of gross domestic product

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

-0.4

-0.5

-0.3

-4.1

-10.0

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

12.4

10.7

9.0

19.5

41.5

Compared to annual report data 2008 of the Ministry of Finance on general government consolidated budget execution which showed that general government budget deficit comprised 539.4 mln lats or 3.3% of GDP, budget deficit, according to ESA’95 methodology was larger by 133.0 mln lats or 0.8% of GDP. Main adjustments which impacted this difference are:

- adjustment for liabilities to creditors (data of the Treasury) – 63.2 mln lats or 0.4% of GDP;
- adjustment for claims to debitors (data of the Treasury) + 46.3 mln lats or 0.3% of GDP;
- Taxes using time adjustment method (information source – calculation of the Ministry of Finance) – 46.1 mln lats or 1.3% of GDP;
- balance of merchants controlled and financed by central and local governments classified to general government sector (data of the CSB) – 45.4 mln lats or 0.3% of GDP;
- Expenditure on construction of the South Bridge (data of Riga town council) – 41.5 mln lats or 0.3% of GDP.


Government budget deficit or surplus by sub-sectors
in 2005-2008, as % of GDP


In 2008 general government debt value exceeded debt level of 2005 almost three times and reached 3181.4 mln lats or 19.5% of GDP. Central government debt before consolidation among sub-sectors was 3871.2 mln lats, local governments' debt - 668.8 mln lats, social security fund debt - 0.7 mln lats.


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

In the calculations of notification of October 2009 data from the Ministry of Finance, the Treasury, the Ministry of Economics and Central Statistical Bureau are used.

On October 22 Eurostat will release information on the results of the October 2009 notification in all EU member states.




Prepared by the Government Finances Section
Vija Veidemane
Tel. 67366963



[1] In 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%.

[2] Previously published data on general government budget deficit and debt in April 2008 notification for 2005 – 2008 are adjusted.

[3] Forecast of the Ministry of Finance