Page 64 - CE Outlook Regions 2023

Parliament approved the 2023 budget in mid-July, in line with the
practice of previous years, with a deficit target of 3.5% and a 4.1% GDP
growth projection, with inflation rising by 5.2% on average.

At the end of the year, the government will amend the 2023 budget bill
by decree, bypassing parliament thanks to extended emergency
powers. In the updated target, the government sees GDP slowing to
1.5%, the budget deficit falling to 3.5% and inflation at 15%.

A tighter fiscal stance is required to keep state debt on a downward path
amidst decreasing but still-sizeable financing needs and rising costs,
and to complement monetary policy in dampening demand and inflation,
the IMF said.

The European Commission said the deficit is forecast to remain high at
6.2% of GDP despite robust revenue growth from inflation. Increased
spending in response to high energy prices is forecast to put pressure
on the public finances in 2022 and beyond.

The deficit is set to narrow to 4.4% of GDP, driven by additional windfall
profits and sectoral tax revenues, reaching an estimated 1.4% in 2023,
which are set to be largely phased out in 2024. OECD's forecast in
October put the 2023 deficit at 4.6%, falling from 5.6% in 2022.

4.4 Budget and debt - Latvia

Government debt to GDP in Latvia is expected to reach 47% of GDP by
the end of 2022. It stood at €15,146 million in the second quarter of
2022.

4.5 Budget and debt - Lithuania

Lithuania’s state budget revenue is expected to grow by 3.4%, or by
(€510 million) in 2023 and stand at €15.62 billion, including EU funds.
Expenditure is projected to go up by 6.1% (by €1.07 billion) to €18.61
billion in 2023.

The projected state budget deficit stands at 4.9% and the public debt
will rise to 43% of GDP in 2023.

64 CE Outlook 2023 www.intellinews.com