Latvia Economic and Defence Update

% of GDP SUPPORTIVE FISCAL POLICY IN 2020-2022 AND GRADUAL RETURN TO <<NORMALITY>> - prudent fiscal policy in the coming years Government commitment to respect the structural balance rule of deficit not more than 0.5% of GDP During COVID-19 crisis the general government deficit has increased more than just for the fiscal impact of the temporary (one-off) support Fiscal strategy 2023 - 2025 (expenditure exempted from the calculation - defense investments and energy, COVID-19 and refugees from UA support package) 1.0 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 0.0 0.0 -1.0 -0.6 -0.8 -0.8 -2.0 -1.2 -1.6 -1.4 -3.0 -4.0 -5.0 -6.0 -7.0 -8.0 -4.2 -4.3 -4.7 -7.0 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 0.0 -0.2 -0.4 -0.3 -0.6 -2.0 -2.3 -0.8 -0.7 -1.0 -1.2 -1.0 -1.4 -1.6 -1.8 ויוןויו!! -0.03 -0.5 -0.5 -0.5 -0.5 -1.1 -1.2 -1.2 -1.5 As of 2023 planned structural deficit, including fiscal security reserve 0,1% of GDP -2.0 -1.9 Deficit Deficit, excluding one-off measures Source: Eurostat, Law on State Budget for 2023 and budgetary framework for 2023-2025, February 2023 -6 -8 64202 46% -2 -4 Emergency COVID -19 package and supportive fiscal policy pushed deficit to one of highest in EU General government budget defict in 2021 (% no GDP, results of the EDP notification Autumn 2022) 0.8 -0.1 -1 -1.8-1.7-1.7 -2.9-2.7-2.6-2.6-2.4 -3.9-3.7 -7.8-7.5-7.2-7.1-7.1-7.0-6.9-6.5-5.9-5.6-5.5-5.1-4.7 -6 -7 -10 2013-2022 deficit excluding one-off Structural balance, excluding one-off measures Nominal deficit Structural balance objectives (2023-2025) (General Government deficit according to ESA methodology) 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2013 1 0 3.6 -1 % of GDP -2 -1.2 -1.4 -1.6 -3 -4 -5 56 0.0 -0.8 -0.6 -0.8 -1.0 -0.9 0.1 Deficit projections -2.0 IND HN -4.3 -4.7 -4.2 -2.3 MT EL IT HU RO LV ESP FR AT BE SK CZ SI BG DE PT FI HR NL EE PL IE CY LT SE LUX DK -8 measures, for 2023-2025 deficit based on Structural balance objectives -7.0 15 Source: Eurostat Source: Eurostat, Law on State Budget for 2023 and budgetary framework for 2023-2025, February 2023

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