Planned Budget Cuts Proposed by Latvian Government Ministries
Cost-Cutting Measures in the 2026 Budget: A Preliminary Overview
The government is currently evaluating proposals aimed at reducing public sector spending, with a key meeting scheduled for August 19th. The Ministry of Finance has identified opportunities to cut expenditure by €150 million in 2026, which could lead to cumulative savings of up to €450 million by 2028.
However, the specific cost-cutting measures proposed by various ministries in the 2026 budget remain unclear. While some insights can be inferred from related budget and economic updates, detailed information about the direct impact on public sector spending up to 2028 is not yet available.
The Union Budget 2025-26 includes structural reforms such as the abolition of multiple tariff rates and adjustments in cess/surcharges, which could be part of efforts to streamline government revenue and expenditure. Increased allocations for priority sectors like agriculture and infrastructure projects suggest targeted spending rather than widespread cuts.
In the health sector, a reduction in expenditure of €4.6 million is expected. The Ministry of Health and its subordinate institutions are reportedly considering the cancellation of health insurance policies for employees as part of these cost-cutting measures.
The Ministry of Agriculture intends to save seven million euros by reviewing its functions and reducing the number of employees. Meanwhile, the Ministry of Culture sees opportunities for savings through reduced subsidies to subordinate institutions and a change in the financing model for music and art schools. The Ministry of Economics has announced it would cut the number of employees.
However, it seems that ministries are in no hurry to reduce bonuses and cash rewards, and the process has been slow due to the lack of specific figures. Some politicians, like Andris Šuvajevs, co-chairman of the Progressives, have expressed concern that not all ministers are equally committed to this task. Šuvajevs suggests that this could have been an opportunity for ministers to push through unpopular but justified proposals due to the geopolitical situation.
Prime Minister Evika Siliņa has stated that savings should not impact benefits, education, health services, or similar expenditure. Minister Agnese Lāce, of the Ministry of Culture, has also clarified that the ministry is only looking to reduce administrative costs, not state-funded healthcare services.
In summary, while the specific cost-cutting measures in the 2026 budget are yet to be fully disclosed, it appears that the government is focusing on structural reforms, targeted spending, and administrative cost reductions across various ministries. More details are expected to emerge closer to or after the 2026 budget presentation.
- The Ministry of Finance has proposed to cut €150 million from the public sector spending in the 2026 budget, aiming for cumulative savings of up to €450 million by 2028.
- The Ministry of Health and its subordinate institutions are considering canceling health insurance policies for employees as part of the cost-cutting measures.
- The Ministry of Agriculture intends to save €7 million by reviewing its functions and reducing the number of employees.
- Minister Agnese Lāce of the Ministry of Culture has clarified that they are only looking to reduce administrative costs, not state-funded healthcare services.
