The Fiscal Council commences work on the question of government debt 10 December 2015
The question regarding the optimal level of government debt came into sharp focus after the most recent economic crisis (2008-2010). As a result of the crisis, average government debt levels, as a percentage of the gross domestic product (GDP), increased by 26 percentage points in the European Union and by 33 percentage points in Latvia. The Fiscal Discipline Law stipulates that a government debt level below 60% of GDP is one of the four fiscal rules that have to be observed when planning and executing the state budget. Due to the fact that the level of government debt, which was accumulated during the crisis, has yet to be reduced, the Council attempts to raise the question of government debt and assess how the risks of a new economic downturn could impact Latvia’s government debt.
The document is available here.