Latvian Political Monitor

Since 2020, the state apparatus has grown by +10,500 employees, despite a falling number of employed people and residents. As a result of the municipal reform, where the plan was to save and reduce resources = the number of employees has grown by +2,500. Public services 🇱🇻 are 26% of GDP vs 23% in OECD countries. Public-sector employment is 24% (the highest figure) vs 18% in the OECD. State intervention in the economy has grown by 10 percentage points, to a record-high 46%. In the next 4 years, all of these indicators must be reversed — that is our ironclad plan, if we are given such an opportunity.

HOW CAN ONE NOT PROMISE! - the classic once said 🗳️ PARTIES — WHO PROMISES MORE? Given this stark budget reality and the legacy left in state finances, where even borrowing up to the maximum 🇪🇺EU-allowed budget deficit limit is not enough, the pre-election promises of political parties stand out especially. They are no longer measurable in hundreds of millions — they are already measurable in billions €, moreover without financial coverage and without a real economic growth proposal. I have analysed the programmes of several political parties and summarised each party's promises in money terms for the period from 2027 to 2030. 🏆 The record holders of political "Promisers" for the next four years: 🥇 No.1 — Suverēnā Vara / Jaunlatvieši (Stepaņenko wants to give benefits, cut VAT, raise salaries): +3.61 billion € 🥈 No.2 — @LatvijaPirmaja Latvia First (@SlesersAinars – we reduce VAT on everything): +2.87 billion € 🥉 No.3 — @ZZS_ (@ViktorsValainis — promising to abolish VAT): +2.47 billion € 4️⃣ @Progresivie (@suvajevs — because money grows on trees): +2.1 billion € 5️⃣ @Jauna_Vienotiba (@aseradens — we continue borrowing endlessly): +1.56 billion € 6️⃣ @VL_TBLNNK National Alliance — (wants to fund language, education, culture and fight illegal migration, without thinking about the ECONOMY): +1.55 billion € 7️⃣ @Apvienotais_ — we will not promise what we cannot deliver, main focus on education that will pay off in the future, with justification of where we will take the funding: +763 million € When you go to vote - ask the question - HOW DO THESE BIG PROMISERS REALLY INTEND TO IMPLEMENT THEIR PROMISES, IF ALREADY TODAY THE STATE FINANCES HAVE A €420M FINANCIAL HOLE (already next year), WHICH MUST BE FILLED? And think about who left such a financial pit legacy

Unlike the other prime minister candidates, I do not have time to prepare for the debates, because I have to run the country and make very difficult decisions, such as today about the legacy left by Rail Baltica. What was shown in the studio was material prepared by myself, in which, in addition to the fresher information provided by the FM on state finances, I inserted my own analysis of all parties' irresponsible promises in programmes without funding coverage. I delve into the numbers myself and, unlike the others, we in AS do not intend to deceive the voters.

@Dairis_Mr_21 @Broks @AndrisKulbergs Well, I cannot agree, Dairi. That is not so. Quick examples: - ICT procurements were halted so the state would not be defrauded. - airBaltic finally made a decision. - reduced the excise tax; - 52 million for teachers; - He slurped up Braže's soap, getting million cases from FRA. I am only naming the most visible ones publicly.

Sloganically correct, but our politics is distinctly left-wing. That could also be seen in the debates. One promises cheaper fuel, another other kinds of support, heating also has to be compensated (🙈), and the theses on how the state will develop the economy, productivity, exports, etc. were not particularly impressive. The only thing the state can do is interfere less (and ensure reasonable, competitive taxes). If support and benefits are promised (and that happens in every election), then none of that is possible by definition.

@taisnibaskalps @VL_TBLNNK @Apvienotais_ 1- A fairly plausible hypothesis that ST is a springboard document + I agree that we can introduce laws ourselves. In reality they already were/are. The biggest problem is with police capacity and capabilities. 2- I also agree.

Yes, good examples. Shows the problem. But, on the other hand, the state provides basic services to all people. We are a socialist state. Health, education, including. It is not free in the end, but partially. Who pays for it? That part which is able to work and works, roughly half of the state. And then one tricky question. Life requires means to survive. And those minimum social contributions are based on the minimum wage. I do not believe that most people live on a third of the minimum wage. Do you believe? Of course, there are exceptions, the same young mothers. You can still find them, but those will be exceptions.

@KBBergis @Andrejs96162082 Ireland once set up an offshore and earned its wealth. Now this practice was cancelled for them. But they didn't take away the wealth.

@ArtjomsMilovs @VadimsLasenko One can allow for such a possibility. It really can be so, you are right Artjom👍 If there is a need, the responsible institutions will be able to find out very simply.

The ministry is not 'milking' anything; it is basically just state accounting. They are best at calculating. It is the same as in the private sector - accountants know the numbers best. I have 25 years of experience in this field. The difference is that the state is run by elected people, not knowledgeable business managers. That is why absurd nonsense is heard that 'accountants are to blame'. In a private company, the board does not do that, because that would mean the board are monkeys and the result is bankruptcy. Such a business ends.

@pudzinsh I agree about the part of the funding coming from the state. It needs to be larger, considering the number of athletes and access to sport as such. Even the rich Norwegians do this. But not with the current management team. They have shown in the long run that they are not capable.

We have discussed this at the Ministry of Finance. As an entrepreneur, minimum contributions seem unfair to me, because not everyone works full time. But the counterarguments are also strong. First, very many people cheat in such situations - they record fewer hours than actually worked. We have to take into account what society is like. Second, knocking out an additional source of tax revenue in this situation, when the budget is dramatically in the red, is not very realistic. Third, the state somehow has to collect those minimum taxes to ensure social services.

Very precise... that's exactly how it is. That is exactly why rules are being developed so that funding allocation is clear, so that it has usefulness and conditions for measuring that usefulness, and everything would be open and accessible. So that NGOs would not serve as political pocket organizations. Let NGOs serve real public interests.

Day No. 85 in the prime minister's chair (Monday) – 💰 Parties — who promises more? 📊 Budget scenarios; 🇳🇵 News from Nepal The day was spent working with @MarisKucinskis, @Finmin and @Valstskase officials and managers, analysing state finances, economic forecasts, saving opportunities and various scenarios. 📊 Figures, data and facts: ➖ The financial policy and spending management of previous governments have long been irresponsible — the budget deficit has been kept at the maximum possible limit, regularly borrowing money also for everyday spending. Such an approach had become the norm, and the whole Latvian society and sectors have become accustomed to this model. ➖ In 2028, the largest budget deficit is forecast — €2.7 billion, or 5.4%! ➖ Just servicing the state debt, i.e. interest payments, will already cost €681 million next year. This money will have to be found somewhere — so somewhere less will have to be spent. Debt servicing costs have risen from €155 million in 2021 to €681 million in 2027, because the price of money has become significantly higher. ➖ By 2030, the budget plans adopted by New Unity's finance ministers and prime minister provide for a deficit of around €2 billion every year. That is not safe and sustainable management of state finances. ➖ The Siliņa government (JV) left behind decisions adopted in the Cabinet of Ministers or laws worth €421 million in 2027, and this amount rises to €663 million in 2030 — WITHOUT ANY FINANCIAL COVERAGE. Of which: 🏥 €264 million — for health care 👩‍🏫 €56 million — for teachers' salaries ➖ Latvia's current and forecast economic growth is stagnatingly low — around +2% a year, but its contribution to the budget is largely eaten up by forecast annual inflation of +3.5%. ➖ The largest increase in budget expenditure is for defence and security — +32%, amounting to around €2 billion a year. ➖ The state has long been programmed to live at the maximum permissible budget deficit, without reviewing existing expenditure and on top of that adding another +1.5% of borrowing for security, which the 🇪🇺EU allows to be additionally included in the deficit for three years. Conclusion? 👉We do not review existing budget expenditure. 👉We continue to live on debt. 👉And we borrow even more, because we are allowed to do so. That is not right. ➖ Also noteworthy is the manoeuvre of E. Siliņa's (JV) government, borrowing 1% from the 2nd pension level. That too will have to be paid back into the budget — an impact of around €280 million in 2029. ➖ Also in 2029, the term expires for the additional tax imposed on banks, i.e. the windfall tax. As a result, the state budget will also lose these additional revenues. ➖ One of the biggest problems in budget planning is politically adopted decisions to "tie" spending in specific sectors to a certain percentage — for example, 6% of GDP for health care — or to automatically index wages. If a budget expenditure is tied to a specific %, the whole expenditure part automatically increases as GDP or another variable grows — without any new government or Saeima decision. ✅ There is also good news. The Ministry of Finance and @kucinskis have been working since July, reviewing the ministries' base expenditure, and have already found €214 million in savings in the 2027 budget base. That is a step in the right direction, but there is still a lot of work to do. We must continue to optimise expenditure so that there is money to cover already planned and adopted commitments for which no revenues have been identified. 📕 One thing is clear to me — the next government will have to adopt an iron-fisted "2027–2030 FISCAL STABILITY AND REFORM PLAN", more precisely — a special law, similar to during Covid. The way out of this financial situation is not a simple spending-cutting plan. That will not be enough this time. 📈 The economy and budget revenues must be grown rapidly, with the main emphasis on the opportunities of export-capable companies. I believe this is possible, because such slow economic growth can and should be increased by at least +1.5 percentage points a year. That would give the budget an additional around €300 million in revenue. 💶 But we need to save already today — already for 2027. That is why the ministers agreed: ⛔ To stop the typical DECEMBER waste — meaninglessly spending the balances of ministries and institutions at the end of the year. ⛔ From 1 October, to suspend the conclusion of any new contracts and commitments. A similar moratorium as in the ICT area — if something is truly necessary, the need and usefulness must be proven. 🧊 To freeze salaries at the 2025 level. ⛔ To stop paying DECEMBER bonuses and extra payments — an exception may be allowed only for special achievements and with a manager's justification. ⛔ To stop unnecessary events, seminars, conferences, consultations and studies, as well as office and equipment renewal, IT and other investments that are not critically necessary. 🔍 Ministers must take political responsibility and, together with state secretaries and heads of institutions, review and justify any budget expenditure above €50,000. 🗳️ PARTIES — WHO PROMISES MORE? Given this stark budget reality and the legacy left in state finances, where even borrowing up to the maximum 🇪🇺EU-permitted budget deficit limit is not enough, the pre-election promises of political parties stand out in particular. They can no longer be measured in hundreds of millions — they are already measured in billions of euros, moreover without financial coverage and without a real economic growth offer. I have analysed the programmes of several political parties and summarised each party's promises in monetary terms for the period from 2027 to 2030. 🏆 The political "Promisers" record-holders for the next four years: 🥇 No.1 — Suverēnā Vara / Jaunlatvieši (Stepaņenko wants to give benefits, cut VAT, raise wages): +€3.61 billion 🥈 No.2 — @LatvijaPirmaja (@SlesersAinars – we lower VAT on everything): +€2.87 billion 🥉 No.3 — @ZZS_ (@ViktorsValainis — promising to abolish VAT): +€2.47 billion 4️⃣ @Progresivie (@suvajevs — because money grows on trees): +€2.1 billion 5️⃣ @Jauna_Vienotiba (@aseradens — we continue to borrow endlessly): +€1.56 billion 6️⃣ @tblv Nacionālā Apvienība — (wants to fund language, education, culture and fight illegal migration, without thinking about the ECONOMY): +€1.55 billion 7️⃣ @Apvienotais_ — main emphasis on education, which will pay off in the future, with a justification of where we will get the funding: +€763 million 🇳🇵 NEPAL In the Nepalese context — all those belonging to Latvia are still in the status of missing persons. According to the Civil Law, one must wait until April 2027 to change this status and relatives can start arranging the necessary documents. Until then — hope dies last. The Latvian government is ready to help in every possible way, if such a need arises.

Latvia's future starts with young people's opportunities today! 🚀 First job. Affordable housing. The chance to safely plan a family. These are the foundations for a young person to begin an independent life and build their future in Latvia. THE UNITED LIST has concrete solutions: a 10% micro-enterprise tax rate for individuals, housing grants, state guarantees and rental housing programmes for young families, as well as the opportunity to work while on parental leave without losing the child-raising benefit. And one more important thing. Young people must be not only recipients of policy, but also its creators. That is why youth initiatives and real opportunities to participate in decision-making must be strengthened. Youth opportunities are a matter of Latvia's growth and future. Video: LTV platform 16+. Political debates for young people | Priority X https://t.co/dMHrjzxh3J

The Green Course must strengthen Latvia's economy, and its goals must be proportionate to our capabilities. Latvia cannot afford promises worth billions without clear funding. Every decision must be assessed by what it gives people and businesses: more affordable energy, new jobs, and opportunities to develop manufacturing. The implementation of climate goals must go hand in hand with Latvia's competitiveness and energy independence. I advocate a responsible approach: to invest in projects that create value in Latvia and to undertake commitments that we are able to fulfill. Ambitions must be based on calculations, because ultimately society pays for political promises. 🎥 Video: Delfi TV debates “Nākamais lūdzu!” about Latvia's place in the world (23.09.)

After reviewing the ministries' expenditure base, it has been found that next year it can be streamlined by a total of 214 million euros. This is not an amount that could be reallocated to some other spending. This streamlining allows us not to sink into an ever-growing debt yoke within the mentioned sum. https://t.co/ahP9ZNb0RG