In 2021 general government budget deficit amounted to 7.0 % of GDP

Results of the October 2021 Notification on General Government Budget Deficit and Debt¹ compiled by the Central Statistical Bureau (CSB) in line with the methodology of the European System of Accounts (ESA 2010) show that, in 2021 general government budget deficit amounted to EUR 2.4 billion or 7.0 % of the gross domestic product (GDP) and general government consolidated gross debt amounted to EUR 14.7 billion or 43.6 % of the GDP.

General Government Budget Deficit or Surplus and Debt

Under the impact of COVID-19 pandemic, general government expenditure in 2021, compared to 2020, rose by 16.0 % and reached EUR 14.8 billion, of which EUR 2.2 billion were expenditure on COVID-19 support measures for the national economy, but income – increased by 8.8 % and reached EUR 12.5 billion.

As compared to operating cash flow data indicated in the annual report of the Ministry of Finance, where consolidated budget deficit in 2021 was EUR 1.8 billion, budget deficit calculated by the CSB in accordance with the methodological requirements of European System of Accounts 2010 is EUR 505.8 million or 1.5 percentage points of GDP more.

Most significant methodological adjustments with positive effect (reduces budget deficit) on the general government budget:

• tax adjustments by using the time adjustment method (data of the Ministry of Finance) – by EUR 305.1 million or 0.9 % of GDP;
• adjustments to claims against debtors (data of the Treasury) – by EUR 121.2 million or 0.4 % of GDP;
• adjustments between accrued and paid interest (data of the Treasury) – by EUR 40.5 million or 0.1 % of GDP;
• adjustments for exclusion of transactions of derived financial instruments (data of the Treasury) – by EUR 35.4 million or 0.1 % of GDP;
• balance of central and local government enterprises reclassified to general government (CSB data) – by EUR 4.2 million or 0.01 % of GDP.

At the same time, there have also been adjustments with negative effect (increases budget deficit) on the general government budget:

• adjustments for retained contribution into the Single tax account (data of the Treasury) – by EUR 346.0 million or 1.0 % of GDP;
• adjustments to Recovery and Resilience Facility (data of the Treasury) – by EUR 237.4 million or 0.7 % of GDP;
• adjustments to obligations against creditors (data of the Treasury) – by EUR 180.2 million or 0.5 % of GDP;
• adjustments for government investments in central and local government enterprises (data of the Treasury) – by EUR 87.8 million or 0.3 % of GDP;
• balance of the Deposit Guarantee Fund (data of the Financial and Capital Market Commission) – by EUR – 47.3 million or 0.1 % of GDP;
• adjustments for balancing foreign financial aid flow (data of institutions involved in administration of foreign funds) – by EUR 42.7 million or 0.1 % of GDP;
• adjustment of securities premium in the issue year to ensure recognition of premiums in revenue in the following years until the redemption of securities (data of the Treasury) – by EUR 32.1 million or 0.1 % of GDP;
• adjustments for future payments of the 2nd pillar pension scheme funds (data of the State Social Insurance Agency) – by EUR 28.6 million or 0.1 % of GDP;
• adjustment for superdividend – EUR 10.0 million or 0.03 % of GDP.

Taking into account the increasing volume of borrowings affected by financing needed to reduce the consequences of COVID-19, in 2021, compared to 2020, general government debt has risen by EUR 2.0 billion and reached EUR 14.7 billion or 43.6 % of GDP.

The previously published general government budget deficit and debt data for previous years have been revised. Taking into account recommendations of Eurostat, the statistical office of the European Union, the general government debt data have been recalculated, excluding doubtful subordinated capital liabilities and adding capitalized interest. In addition, the central government budget deficit has been revised by correcting the EU funds.

Eurostat, statistical office of the EU, will release information on the results of the October 2022 notification in all EU Member States on 21 October.

Methodological information

While carrying out calculations of the October 2022 notification, data of the Ministry of Finance, the Treasury, State Social Insurance Agency, CSB, Riga City Council, Financial and Capital Market Commission, Central Finance and Contracting Agency and institutions involved in administration of foreign funds were used.

¹ In accordance with the requirements of Regulation (EC) No. 479/2009, the Notification on General Government Budget Deficit and Debt is submitted to the European Commission twice a year – by 1 April and 1 October. 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 general government budget deficit to the 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 be no more than 60.0 %.

² Consolidation was carried out in each sub-sector but not across the sub-sectors.

Media requests:
Communication Section
E-mail: media@csp.gov.lv
Phone: +371 67366621, +371 27880666

More information on data:
Vija Veidemane
Government Finance Section
E-mail: Vija.Veidemane@csp.gov.lv
Phone: +371 67366963