Latvia government on late Saturday night agreed on budget consolidation measures of 290,7 million lats ($5.61 billion) for 2011, where most of the money will be gained through tax rises, the finance ministry said on Sunday.
Baltic state's government has pledged to reduce its budget deficit below 6 percent of gross domestic product (GDP) in 2011 from this year's expected figure of 8.5 percent under bailout it took from International Monetaray Fund (IMF) and EU in 2008.
Finance ministry said in a statement on Sunday the biggest part of consolidation measures worth almost 157 million lats would come from rise in revenues and government will gain 88.8 million lats by cutting budget spending. Latvia government also plans to gain almost 45 million lats from changes in the second pension pillar.
Central bank previously strongly called to avoid tax hikes as that would harm just renewed recovery of the economy. Latvia has pledged to cut its deficit to 3 percent of GDP by 2012 to eventually adopt the euro, hoped for in 2014.
Government's approved plan for budget deficit reduction in 2011 includes such measures as the rise in value added tax and real estate tax as well as a rise in social contribution tax.
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