The Fiscal Council objects to increasing the deficit on account of additional expenditure on education. 25 October 2016
"The Fiscal Discipline Council agrees that structural reforms in education should be a government priority. Improved quality of education can lead to increased productivity, which is currently one of the major obstacles to the country’s economic development and convergence to the EU average", argues Council member Morten Hansen.
"Nonetheless, the budget deficit and, consequently, public debt should not be increased to implement these reforms, especially since the funds aim at raising salaries and not to pay for structural reforms per se. This is not a one-off measure and will permanently increase expenditures. Other sources of funding are possible, without raising the budget deficit. One option is to look for available resources within the education sector itself; this would be preferable, as overall public funding for education in Latvia is higher than the EU average. Another option would be to compensate expenditures by finding ways to increase revenues, without deviating from the budget balance target and increasing the budget deficit", Morten Hansen explains.