Fiscal Discipline Council: By raising the budget deficit the government also raises the inflation.
In the context of rising inflation, the excessive increase in the government deficit stimulates inflation, which raises social tensions and reduces the competitiveness of enterprises. This is what the Fiscal Discipline Council emphasizes in their latest crisis monitoring report Nr. 17 which also gives an insight about the impact of Covid-19 on the national economy and fiscal position of Latvia.
The summary of the report is available here, the full report (in Latvian) can be found here
The archive with the previous reports is available here.