Budget, EU – Baltic States, Financial Services, Latvia, Pensioners

The newspaper Diena reports today that the IMF claims that the government further reduce pensions. Besides, the IMF also wants social benefits and salaries in the public sector cut next year, the government must carry on with public administration, healthcare and education system reforms, increasing the retirement age and restructuring the social budget's expenditures. The IMF also wants several taxes increased, also value-added tax, if the budget revenue keeps falling. The IMF claims that the budget deficit must not exceed 8.5% of the gross domestic product next year, and 6% in 2011. Finally, the IMF proposes Latvia to introduce progressive tax starting next year, which the ruling coalition does not support, and the government is opposed to lowering pensions either, reports LETA.

As Dombrovskis said in the interview, the talks with the IMF continue and it is unknown yet when they will conclude. Until then Dombrovskis does not wish to comment on any details.

Dombrovskis did say, however, that VAT will only be increased if both sides cannot reach other solutions.

According to the premier, there are many things that the Latvian government had said it would do but did not, therefore it is logical that the IMF is "rather nervous" in the current situation.

Dombrovskis emphasized that the talks with the IMF must continue and both sides must reach a compromise.