Latvia Economic and Defence Update

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 7.00% Public support packages (% of GDP, impact on budget balance) Principles in calibrating the support measures ✓ All support measures are temporary 6.00% 5.00% 4.00% 3.00% 2.00% 3.17% 1.00% 0.00% 2020 3.6% 6.26% 1.13% 2021 0.42% 2.04% 0.46% 0.31% 0.15% 2022 2023* Energy compensation for housholds, social benefits ■Compensation of enegy prices for companies ■Covid support Note: electricity related support that applies to both households and companies is split equally among those categories * Execution on 28.02.2023. Source: Ministry of Finance; Data on March 13, 2023, the Treasury calculations ✓ 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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