Kulbergs' Plan: Save €2.875 Billion in Latvia's Budget Over Four Years
Unofficial details of prime minister candidate Andris Kulbergs' plan envisage saving €2.875 billion in the budget by 2030, mainly through public administration cuts, while drawing more people into the workforce.
Latvia's state budget must save €2.875 billion over the next four years, with the main savings to come from public administration. This is according to unofficial information, obtained by the news portal Delfi, about solutions proposed by prime minister candidate Andris Kulbergs of the political force "United List" to improve the budget and the economy.
The United List won the 15th Saeima (parliament) election held in early October, securing 41 seats. President Edgars Rinkēvičs has formally asked Kulbergs to form the next government. The make-up of a potential coalition remains unknown.
Goal and workforce
Kulbergs aims to return by 2030 to the situation of 2018, which he calls a "good year": real growth then was 4% and the number of employed people reached 909,000. If that many people were employed, the state would collect roughly €290 million more in taxes every year.
To fill about 26,000 jobs, the plan would draw into the labour market young people who are neither studying nor working (estimated at 26,000), offering them a reduced personal income tax rate for their first three years of employment. It also aims to engage around 15,000 young mothers on childcare leave by letting them work part-time without losing parental benefits. Seniors would be offered lower employer social contributions and flexible hours. Between 3,000 and 6,000 public administration employees are also considered a labour resource, moving to the private sector.
Spending cuts
The savings are scheduled as €822 million next year, €667 million in 2028, €675 million in 2029 and €711 million in 2030. The cuts are planned in six areas:
- review of public administration and institutions – about €1 billion, including fewer posts (€85 million), centralised procurement (€40 million) and shared administrative services (€35 million);
- sectoral reforms – €650 million, including a review of sick leave and benefit administration (€50 million) and a hospital cooperation network (€40 million);
- capital, revenue and one-off measures – €540 million, including state company free funds (€135 million), a fixed tax-exempt minimum (€33 million) and an e-commerce parcel tax (€21 million);
- stricter rules and administrative discipline – €370 million;
- review of support measures – €190 million;
- limiting automatic spending – €40 million, by reforming long-service pensions and severance benefits.
Kulbergs' estimates suggest society will feel the cuts more heavily, and the economy less so. No increase in major taxes is currently planned.
State Development Fund
Kulbergs proposes a State Development Fund combining seven state-owned companies valued at about €7.6 billion. Within five years it would attract €1.5 billion in borrowing and mobilise roughly €6 billion of capital in the economy.
