Finance Ministry is  worried  about the support for LDz might have major negative impact on budget

Finance Ministry is worried about the support for LDz might have major negative impact on budget

According to Latvia’s Finance Ministry Latvian Railway (LDz) may be included in the general government sector, which could negatively affect the state budget.

In the report, ministry outlined concerns about the possibility of LDz being added to the general government sector because of the state support. In 2019, considering criteria from the European Commission, municipal public transport company Rīgas satiksme was added to the general government deficit, reducing the fiscal space of the state budget by EUR 72 million in 2020.

Finance Ministry notes that when preparing the 2021 and medium-term budget it was identified that because of state grants provided to LDz this company may be added to the general government sector, impacting the budget deficit in the process.

In order for LDz to be added to the general government budget deficit, the state support amount needs to exceed 50% of the company’s turnover.

Last week the government ordered the Transport Ministry to submit the necessary information and perform the necessary analytical calculations to ensure timely fiscal risk management from the possible classification of LDz in the general government sector.

Photo Credit : https://commons.wikimedia.org/wiki/File:ER2T_modernizations_of_Latvia.JPG

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