Economics, Financial Services, Latvia, Legislation

Aigars Kalvitis.

In an interview to the newspaper Biznes&Baltija, Kalvitis said, commenting why the International Monetary Fund's warnings about the possible economic problems in Latvia were not taken into account last summer: "At that time, I wanted to carry it out, freeze the salaries in the 2009 budget. But trade unions revolted, threatening with dissolving the parliament and strikes. A signature drive was launched to amend the Constitution."

The necessary reforms were not implemented because of public pressure.

"You can blame me for failing to win public confidence and convince the people that the reforms are necessary, but not for ignoring the IMF recommendations," said Kalvitis.

Then Minister of Regional Development and Local Governments, now opposition member Aigars Stokenbergs (Society for Different Politics) denies that he opposed the reforms.

Asked why he did not inform the public about the IMF warning, Stokenbergs explains that he was excluded from the government two months later, besides, the document was labeled as classified.

According to Stokenbergs, yet before the warning was received from the IMF, the fund had offered recommendations regarding the government's counter-inflation plan. However, these recommendations were put off in March 2006 due to objections from Transport Minister Ainars Slesers (Latvia's First Party), who insisted that inflation is like an illness the country simply has to go through. Kalvitis had no choice but agree with Slesers in order to keep the coalition from falling apart.

Ex-Minister of Finance Oskars Spurdzins (People's Party), on the other hand, points out that the government did not ignore IMF advice but implemented some of the measures proposed by the IMF. For instance, a non-deficit budget was endorsed by the government.

Biznes&Baltija wrote earlier that the IMF had offered Latvia several recommendations last year already, but these recommendations were largely ignored.

Now these same measures will have to be taken, but the reforms will be more painful now, the newspaper wrote.