Latvia Economic and Fiscal Outlook

14 FISCAL SPACE PROVIDED A POSSIBLITY FOR SIGNIFFICANT PUBLIC SUPPORT PACKAGE Extension of support measures into 2023 and calibrating them to minimize the negative spill-overs 7.0% Public support packages (% of GDP, impact on budget balance) 6.4% Principles in calibrating the support measures ✓ All support measures are temporary 6.0% 5.0% 4.0% 3.3% 3.0% 2.0% 1.0% 0.0% 2020 2021 3.8 % 0.4% 1.6% 1.3 % 0.4% 1.8% 0.9% 2022 Compensation of enegy prices for companies Energy compensation for housholds, social benefits Covid support Source: Ministry of Finance; Data on 28.09.2022 2023 ✓ As far as possible the support is targeted to most vulnerable households and companies Targeted support measures The size of targeted measures should be significant enough to address the underplaying challenges Broad support measures Necessary to avoid socio- economic risks and ensure preservance of political stability Should be as small in size as possible to minimize negative effects in wage – inflation spiral

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