According to the estimate by the State Treasury, by mid-September 2013 consolidated budget posted a surplus of LVL 251.2mn (EUR 357.5mn). Since the end of July a surplus of LVL 50mn was thus seen (vs. LVL 21.5mn surplus in June and LVL 32mn in July).
To compare, in Jan-Sep 2012 LVL 341mn consolidated budget surplus was posted. In H1/13 a surplus of LVL 165.6mn was estimated by the Treasury.
The data is based on cash-flow methodology, with numbers slightly higher than ESA’95 official calculations. Previously FinMin noted that slower economic growth has moderated the growth rate of tax intake in the beginning of the year.
Most recently, FinMin revised Latvia’s general government budget deficit target down to 1.1% of GDP, based on the latest estimates compliant with ESA’95 methodology. Previously the deficit target was 1.4% of GDP. FinMin attributed the downwards revision to positive dynamics of budget revenues in Q1/13, which grew by 12.3% y/y. Both tax income and transfers from European fund showed strong growth.
General government budget deficit in 2012 calculated according to the European System of Accounts ESA95 amounted to 1.2% of GDP or LVL 187.2mn (EUR 266.4mn). This was the fifth smallest budget deficit in GDP terms in EU, according to Eurostat. Deficit of 1.2% had beaten the target of 1.9% for 2012 (revised downwards twice from 2.5% to 2.1% to 1.9% throughout 2012). It was also better than FinMin’s expectations of 1.5% deficit.
To compare, in 2011, 2010 and 2009 consolidated budget deficit stood at 3.6%, 8.1%, and 9.8% of GDP respectively. In absolute terms budget deficit from 2009 to 2012 was cut almost 7-fold from LVL 1.28bn to LVL 187.2mn. General government debt as of end of 2012 amounted to LVL 6.309bn or 40.7% of GDP, up from 36.9% of GDP in 2009, but below 44.4% and 41.9% of GDP seen in 2010 and 2011, respectively.
Upon Latvian government's agreement with international lenders (IMF and EC), ESA 95 calculated budget deficit was not to exceed LVL 600mn or 8.5% of GDP in 2010, 6.5% of GDP in 2011, and 2.5%-3% of GDP in 2012. The dynamics of the general budget deficit during the austerity program were consistently outperforming these targets.
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