Budget, Financial Services, Latvia

Andris Vilks.

For quite some time, various recommendations from the World Bank and the International Monetary Fund have been available regarding the Latvian budget, but those all were just recommendations. "Knowing the positive signals in the Latvian economy, the amount by which the budget must be consolidated remains the same – LVL 350-400 million," said Vilks.

The minister said that Domburs probably based his statement on data that were valid back in spring: "They were to be taken into consideration but by now they have become obsolete."

If, given the current economic situation, Latvia is able to consolidate the budget by the maximum amount, LVL 400 million, this would make budget planning much easier in 2012, Vilks said.

At the end of October, Latvia had to submit the 2011 budget consolidation plan to the international lenders, which still has not been done, said Vilks. "Next week, the [International Monetary Fund and European Commission] mission will visit Latvia, budget parameters will be discussed with the lenders," the minister added.

As reported, omburs said in an interview with Latvian State Radio this morning that it is possible that the government is prepared to discuss with the international lenders significant amendments to tax laws as well as reducing pensions and benefits, writes LETA.

Domburs said that he might have information that 2011 state budget would be consolidated by LVL 767 million, which is to be discussed with the international lenders.

Domburs asks rhetorically how such an amount could be saved in the budget and at what expense, and if it is possible at all without pension cuts and increasing value-added tax.

In Domburs' opinion, politicians are playing "parallel games" – on the one hand, they are promising not to reduce pensions, but in the meantime they plan to cut budget by LVL 767 million.

Domburs believes that if these proposals have come from Latvia, the community has the right to know about them.