RIGA, June 15 (Xinhua) -- The ongoing COVID-19 crisis will cause the Latvian government debt to widen to an estimated 52 percent of the gross domestic product (GDP), but as growth resumes after the crisis, the debt should be brought back to the pre-crisis level in four to five years, Finance Minister Janis Reirs said on public radio Monday.
As an European Union (EU) member, Latvia is required to meet the so-called Maastricht criteria, which set the caps on government debt at 60 percent of GDP. To support its stumbling economy amid the coronavirus pandemic, Latvia has been borrowing extensively, but is determined not to let its debt grow beyond 52 percent.
The Finance Ministry's plan is to reduce government debt in the next four to five years so that it was in the range between 40 and 45 percent of GDP, Reirs said.
The minister indicated that by not slashing expenditure drastically during the crisis, the government prevented a precipitous drop in budget revenue, and that although in the first five months of this year the budget revenue fell 6 percent short of the target, it was "still better than we had expected."
The minister said that the Latvian economy is projected to recover in two to three years thanks to the support measures aimed at fuelling economic activity and that the faster the economy grows the sooner the debt will reduce.
Reirs also underlined that the government has no plans to revise budget expenditure this year.
The Latvian government has secured over 4 billion euros to shore up crisis-stricken businesses and support struggling residents. (1 euro = 1.13 U.S. dollars) Enditem