In 2020, general government budget deficit accounted for 4.5 % of GDP

Results of the October 2021 Notification on General Government Budget Deficit and Debt for 2020¹ compiled by the Central Statistical Bureau (CSB) in line with the methodology of the European System of Accounts (ESA 2010) show that in 2020 general government budget deficit accounted for EUR 1.3 billion or 4.5 % of the Gross Domestic Product (GDP) and general government consolidated gross debt amounted to EUR 12.8 billion or 43.2 % of the GDP.

General Government Budget Deficit or Surplus and Debt

	2017	2018	2019	2020
Budget deficit (-) / Surplus (+), million EUR
General government	-210.8	-234.0	-174.1	-1 328.1
Central government	-227.2	-288.7	-651.1	-1 409.4
Local governments	-74.1	-191.5	186.8	-45.5
Social security fund	90.5	246.2	290.2	126.8
General government budget deficit as % of GDP	-0.8	-0.8	-0.6	-4.5
Consolidated gross debt at nominal value at the end of the year, million EUR²
General government	10 518.7	10 815.6	11 246.6	12 754.3
Central government	10 530.7	11 039.9	11 885.2	13 598.1
Local governments	1 738.4	1 926.9	2 023.4	2 100.4
General government consolidated gross debt at nominal value at the end of the year as % of GDP	39.0	37.1	36.7	43.2

Under the impact of Covid-19 pandemic in 2020 general government revenues, compared to 2019, reduced by 1.1 % and comprised EUR 11.4 billion, but expenditure – increased by 8.7 % and reached EUR 12.7 billion, of which EUR 0.9 billion were expenditure on Covid-19 support measures for the national economy.

In comparison with the cash flow data indicated in the annual report of the Ministry of Finance, where consolidated budget deficit in 2020 was EUR 1.1. billion, budget deficit calculated by the CSB in accordance with the methodological requirements of European System of Accounts 2010 is EUR 203.2 million or 0.7 percentage points of GDP more.

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

adjustments to state aid programmes issued to the Development Finance Institution Altum (data of the Treasury) – EUR 138.4 million or 0.5 % of GDP;
adjustments to claims against debtors (data of the Treasury) – by EUR 97.0 million or 0.3 % of GDP;
tax adjustments by using the time adjustment method (data of the Ministry of Finance) – by EUR 38.8 million or 0.1 % of GDP;
adjustments for exclusion of transactions of derived financial instruments (data of the Treasury) – by EUR 25.5 million or 0.1 % of GDP;
balance of the Deposit Guarantee Fund (data of the Financial and Capital Market Commission) – by EUR 18.4 million or 0.1 % of GDP;
adjustments between accrued and paid interest (data of the Treasury) – by EUR 14.8 million or 0.1 % of GDP;
balance of central and local governments reclassified capital companies to general government (CSB data) – by EUR 7.1 million or 0.02 % of GDP.

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

adjustments for government investments in central and local government enterprises (data of the Treasury) – by EUR 304.2 million or 1.0 % of GDP;
adjustments for balancing foreign financial aid flow (data of institutions involved in administration of foreign funds) – by EUR 117.4 million or 0.4 % of GDP;
adjustment for superdividend – EUR 48.8 million or 0.2 % of GDP;
adjustments to obligations against creditors (data of the Treasury) – by EUR 43.2 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 29.9 million or 0.1 % of GDP;

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Taking into account the increasing volume of borrowings affected by financing needed to reduce the consequences of Covid-19, in 2020, compared to 2019, general government debt has risen by EUR 1.5 billion and reached EUR 12.8 billion or 43.2 % of GDP.

Eurostat will release information on the results of the October 2021 notification in all EU Member States on 21 October.

Methodological explanations

While carrying out calculations of the October 2021 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