Latvian Political Monitor

@EliEliina @Kuskis Yes, in Germany they recently cut unemployment benefits in this way. You go and they offer you vacancies. Whatever they are. Don't want it, proud? Then you can manage on your own, and they remove the benefit.

That is for several reasons. Budget revenues are not just taxes; they also include so-called foreign aid, i.e. EU funds. They are disproportionately large this year, which is why budget revenues have grown by 10%, although taxes are growing basically in line with inflation (2% real growth, 3-4% inflation, around 5.5% in total). Well, and in the next 4 years, the theft from the second pension pillar (1% of the social tax) ends, as does the bank windfall tax (solidarity payment).

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.

@AivarsLokmanis @KBBergis That is chosen by society. Ours is red, wants almost everything for free. 'The state must provide' is surely already the top thesis among all others. It goes alongside 'the entrepreneur is a thief and the thief must go to prison.' Also to fill up fuel with a discount, why not? Lenin lives forever✊

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.

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.

I recommend reading @Braze_Baiba & her team's annotation of the failure, as a result of which the prime minister had to "deal" overnight in her place the sanctions case with Ireland and France. Service pensions for diplomats, however, are damn good. Why do they still exist, good question! https://t.co/LBbEktcNfC

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

Day No. 83 in the prime minister's seat (THURSDAY, 24 Sept.) — DECISIONS IN THE SAEIMA, HEATING BILLS, LPV ⛽ 8 CENTS. NOT 20, BUT IT IS THE FIRST STEP The Saeima adopted an excise tax reduction for diesel fuel and petrol. From 1 October until the end of the year, the price should fall by about 8 cents per litre — if traders fully include the tax reduction in the price. The diesel excise tax has been reduced from 396 to 330 euros per 1,000 litres, and a rate of 490 euros has been set for petrol. I expect this reduction to be visible on the price lists at petrol stations, not just remain in the text of the law. Thanks to Finance Minister @MarisKucinskis for the quick preparation of the amendments. 🏠 GREATER SUPPORT FOR HEATING BILLS. From 1 November to 30 April, we are increasing the housing benefit for people with low incomes. The average benefit could rise from 149 to 174 euros per month, and the number of recipients to around 37,600 people. Those who already receive the benefit will not have to submit a new application — social services will make the recalculation automatically. 🌾 LATVIA WILL NOT BE A GATEWAY FOR RUSSIAN GRAIN. From now on, grain and other feed shipments from third countries will finally be able to be checked already at the border, including taking laboratory samples. Checks will be carried out by the PVD, and investigations by “BIOR”, because legislation has been amended and 💬 CLARITY ON LPV In an interview with the magazine “https://t.co/iaFoFNjZ5p” I said directly — a coalition with LPV is not my path. I am in favour of an open conversation with the public, even if I sometimes say more than is expected of the prime minister. This was a day when the Saeima adopted several decisions. Now the most important thing is that people feel the result in their everyday expenses.

@Trggrhappytalez @JanisIesalnieks Thanks for sharing your experience that has been shaped by life👍🤝 I will briefly explain how my views formed - statistics on economic growth, to which the overall national welfare was subordinated.

@JanisIesalnieks This is not so clear-cut, Janis. If migration is pragmatically and wisely combined with tax, investment and social policy, then a fairly good result can be achieved in the long term. Is Ireland a good example? If there are excesses, then Malmö and Paris No.2😔

@evita_purina @jemberga There is already an average pension of 1000 and an average salary of 2500.

@Rodzha Yes. All of that has been built up over many years. The next multi-year budget... I don't even know how we'll manage to make ends meet now. No, well. The worst was 2009 when pensions were cut. That's not threatened here, but in all other respects the situation is very complicated.

@E_Stendzenieks @andrislov You won't manage to introduce any inheritance tax, Erik😁 Just as you won't realize your own advertised flash action to rake Lenin's logs into pension savings.

What exactly are my privileges? The fact that I'm at work already at 7:30, often home around 20:00, and work continues also on Saturday?

I'm already talking about the same thing. I haven't seen free medicine myself, but I know that pensioners stand in those lines and someone already gets it. And I'm not complaining, that's how the system works, and I don't feel sorry. In the country overall, 2 euros for medicine come from the budget, and each person adds 1 euro on average. The out-of-pocket expense indicator is around 30%. Probably even more, because not everything goes through the register.