Smiltēns: Latvia could face near-pre-bankruptcy conditions in 2029 and 2030

Latvia may face severe austerity measures, and politicians will have to decide whether they are ready to take responsibility for unpopular decisions. This was said on 7 November on the TV24 programme “Kārtības rullis” by Edvards Smiltēns, Speaker of the 15th Saeima (Latvia's parliament), a deputy of the United List and chair of the board of the Latvian Regional Alliance.

Assessment of the budget situation

Commenting on budget shortfall figures previously cited by Ainārs Šlesers, which reached billions of euros, Smiltēns said Latvia's financial situation is very difficult. In his view, in 2029 and 2030 the country could end up in conditions close to a pre-bankruptcy situation.

Smiltēns believes conditions must be created to attract investment into the country. A stronger economy would mean higher budget revenue and less need to cut spending. Even so, he said unpopular austerity decisions probably cannot be avoided.

A symbolic step and defence spending

As one of the first steps, the politician mentioned cutting lawmakers' compensation by half. He said this would signal that politicians are ready to take on part of the responsibility themselves.

At the same time, he said, Latvia must maintain defence funding at 5% of gross domestic product to ensure national security.

Specific measures not yet agreed

For now, Smiltēns did not want to name specific major spending cuts, saying they have not yet been discussed jointly with the political parties. First, a common action plan must be agreed and then explained to the public.

He allowed that difficult decisions could also face the “Rail Baltica” railway project and the airline “airBaltic”. If funding is insufficient, significant changes to how these are carried out and to their future operations may have to be decided.