Latvia’s Budget Surplus Swells, Driven by EU Funds and Increased Capital Spending
Latvia’s consolidated general budget balance recorded a surplus of 425.4 million euros at the complete of February 2026, a significant turnaround from the 68.1 million euro deficit reported during the same period in 2025, according to the Fiscal Discipline Council (FDP).
Breakdown of Budget Components
The surplus is distributed across various budget segments: 156 million euros in the state basic budget, 148.7 million euros in the state special budget, 97.7 million euros in the municipal budget and 23.1 million euros in the budget of derived public entities.
Revenue and Expenditure Trends
Total revenues increased by 22.5%, or 651.3 million euros, compared to the previous year. This growth was primarily fueled by a 2.3-fold (486.4 million euros) increase in revenue received from the European Union Fiscal Discipline Council.
Expenditures also rose, but at a slower pace of 5.3%, or 157.8 million euros. The most substantial increase in spending occurred in capital expenditures, which surged by 91.2% (161.7 million euros).
Budget Execution and Forecasts
The 2026 budget law allocates 20.9 billion euros to consolidated general budget expenditures. For the January-February period, the forecast anticipated 3.2 billion euros in spending, but actual expenditures totaled 3.1 billion euros, 1.5% or 484 million euros less than projected.
The FDP notes that, based on available data for the first two months of the year, expenses are generally aligned with forecasts. Expenses for January and February represent 15% of the total planned expenditures for 2026, while revenues account for 18.6% of the annual plan.
Recent FDP Appointments and Activities
On March 5, 2026, the Saeima appointed Inta Vasaraudze and reappointed Andrejs Jakobsons as members of the Fiscal Discipline Council for six-year terms Fiscal Discipline Council. The FDP also approved the Ministry of Finance’s macroeconomic forecasts for the Fiscal Structural Plan in February 2026 Fiscal Discipline Council, and updated forecasts in January 2026 Fiscal Discipline Council.
the FDP approved the Ministry of Finance’s macroeconomic forecasts for the Fiscal Structural Plan PR 2026–2030 on February 25, 2026 Fiscal Discipline Council.
Latvia’s Defence Spending and Fiscal Considerations
According to GDP forecasts approved by the FDP in February 2026, increased funding for defence, following reallocation of funds to the Ministry of Defence, will amount to 4.81% of GDP in 2027, 4.64% in 2028, and 4.52% in 2029 LSM. The Fiscal Discipline Council has noted that additional funding for Latvia’s defence in next year’s state budget has been secured mainly by increasing public debt BNN News.
The macroeconomic indicator forecasts were agreed with the LB and the MoE and were approved by the Fiscal Discipline Council on June 9, 2025 European Commission.
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