Latvian central bank advisor warns budget deficit widens too fast

2021-02-23 22:05:52 GMT2021-02-24 06:05:52(Beijing Time) Xinhua English

RIGA, Feb. 23 (Xinhua) -- The central bank of Latvia warned the government on Tuesday that the Baltic country's budget deficit is widening too fast amid the coronavirus crisis.

Edvards Kusners, advisor to the council of the Bank of Latvia (central bank), cautioned the government after the Finance Ministry reported about the rapidly growing expenses that Latvia is financing with its contingency funds and their impact on the macroeconomic situation.

The Finance Ministry said that it expects Latvia's general government deficit to grow from the planned 3.8 percent of GDP to roughly 9.4 percent of GDP this year.

Kusners commented on the Finance Ministry's projections by saying that it would be acceptable to let government debt grow to 50 percent of GDP but that the budget deficit should not be allowed to increase so much at a time when the economy is growing.

"Every fourth euro we are spending now is borrowed money," Kusners said, noting that Latvia last had a record-high budget deficit during the economic crisis of 2009 when it grew to 9.6 percent of GDP.

The advisor also urged against general stimulation of the economy and recommended providing more targeted support to businesses that have been suffering in the crisis. Enditem

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