Saeima Finalizes 2026 State Budget
The Latvian parliament, the Saeima, successfully passed the 2026 state budget on December 4, 2025, following two days of extensive debate. The budget received approval with 52 votes in favor and 42 against. Finance Minister Arvils Ašeradens expressed gratitude to all contributors, stating the budget aims to 'help make the nation and its inhabitants safer in the future.' Prime Minister Evika Siliņa also thanked her ministerial team and other political parties for their constructive criticism, highlighting the increased funding for defense and families.
Key Financial Projections and Deficit
The consolidated state budget for 2026 projects revenues of EUR 16.1 billion and expenditures of EUR 17.9 billion. These figures represent a 6.2% increase in revenues and a 4.7% increase in expenditures compared to the 2025 budget. The budget anticipates a deficit of 3.3% of the Gross Domestic Product (GDP), an increase from the 2.9% projected for 2025. This rise in the deficit is primarily attributed to significant increases in funding for national defense and long-term support for Ukraine.
Strategic Priorities: Security, Families, and Education
The 2026 budget is built around three core priorities: national security, support for families with children, and education.
- National Security: A substantial additional allocation of EUR 448.3 million is earmarked for strengthening national security, bringing total defense funding to EUR 2.2 billion. This investment is projected to elevate Latvia's defense spending to 4.9% of GDP in 2026, with a further increase to 5% in 2027.
- Support for Families with Children: An additional EUR 94.8 million has been allocated to support families with children and enhance maternal and child healthcare.
- Education: The budget also includes increased funding for education, aligning with the government's commitment to quality education.
Prime Minister Siliņa emphasized that these priorities are consistent with the policy objectives she outlined earlier in the year.
Legislative Journey and Additional Measures
The government initially approved the draft state budget for 2026 on October 14, 2025. Finance Minister Arvils Ašeradens formally submitted the budget bill to the Saeima on October 15, 2025. The Saeima then conceptually supported the budget in its first reading on November 6, 2025. The budget process also involved the submission of the draft budgetary plan to the European Commission for assessment of compliance with EU fiscal rules.
Key accompanying measures within the budget include:
- A reduction in Value Added Tax (VAT) on essential foodstuffs such as bread, milk, poultry meat, and eggs, effective from mid-2026.
- An increase in excise duty on strong alcohol, tobacco products, certain gambling activities, and natural resource tax rates.
- Planned increases in both the minimum wage and the non-taxable minimum.
The budget was prepared in adherence to both European Union and national fiscal discipline regulations.
9 Comments
Kyle Broflovski
It's commendable that families and education are receiving more funds, but the sheer scale of defense spending raises questions about resource allocation for other critical public services. A balanced approach is crucial.
Eric Cartman
The soaring deficit is a ticking time bomb. This isn't sustainable for our economy.
Kyle Broflovski
Increasing excise duties means ordinary people pay more. Another burden on us.
Stan Marsh
While the emphasis on national security is understandable given the global situation, the increasing deficit could pose long-term economic challenges. We need to be careful with fiscal health.
Kyle Broflovski
Investing heavily in defense is the only way to ensure our sovereignty in these times. Smart move.
Noir Black
Spending nearly 5% of GDP on defense is excessive. Other sectors will suffer.
KittyKat
A responsible budget that tackles security while not forgetting social welfare. Well done!
Loubianka
Great to see the focus on families and children. This support is much needed.
BuggaBoom
Prioritizing defense is a clear necessity for Latvia's future, but ensuring this doesn't come at the expense of neglected social infrastructure or long-term economic growth is a delicate balance the government must maintain.