Economist Pūce: Latvia borrows around €200 million monthly just to cover basic state functions

Juris Pūce, leader of the “Latvia's Development” party and an economist, discussed Latvia's state budget deficit on TV24's program “Ziņu top,” stressing that the problem is not new but has been publicly known and discussed for a long time.

Pūce said he was surprised that some now present the issue as a newly discovered problem, when Latvia's budget difficulties have long been part of public debate.

Borrowing for basics, not development

According to Pūce, the core issue is not borrowing itself but its purpose. He estimated that the state currently borrows close to €200 million every month, but this money is not directed toward development projects or investments that could generate future economic returns. Instead, it goes toward funding the government's routine, basic functions.

Debt servicing costs keep climbing

Pūce explained that a long-unbalanced budget creates a growing burden: the more the state borrows, the larger the share of future budgets that must go toward debt and interest payments. He said interest payments alone will exceed one billion euros this year, with the figure set to rise further next year.

He noted that money spent on servicing debt is no longer available for other needs, such as healthcare, education or defense.

A risk to future budgets

Pūce argued that borrowing is not inherently a problem if the funds are used for investments that support economic growth and generate additional revenue for the state later on. The situation becomes far more dangerous when borrowing becomes necessary simply to cover everyday expenses. This means an increasing share of future budgets could go toward paying interest on past debt rather than addressing new needs that society actually wants funded.