Monday October 12, 06:55 PM
Latvia agrees drastic bailout cuts: government
RIGA (AFP) - Latvia's government has agreed to live up to the terms of an international bailout for the crisis-stricken state by implementing drastic spending cuts, ministers said Monday.
But a key coalition player insisted it was not a done deal.
"It is obvious that Latvia will fulfil its obligations to international lenders," Finance Minister Einars Repse told reporters after talks among the five coalition parties, who have fallen out over the belt-tightening drive.
He said details of the latest cuts would be revealed "within a week."
Prime Minister Valdis Dombrovksis said the government first had to "coordinate the budget consolidation with international lenders and agree within the coalition."
"Then we can move forward" on the measures, he said.
The Baltic nation has been under intense pressure from the European Union and Sweden -- the two largest donors to a 7.5-billion-euro (11-billion-dollar) rescue package that also includes the International Monetary Fund.
Under the deal, Latvia committed to slashing 500 million lats (711 million euros, 1.035 billion dollars) each year until 2012 to meet EU-set rules on the public deficit -- the shortfall between public revenues and spending.
Riga has so far struggled to find savings of more than 325 million lats for 2010. It has been seeking leeway from lenders as its drive to slash welfare benefits and raise taxes runs into increasing domestic controversy.
The largest force in the coalition, the People's Party, has raised objections to some of the measures, notably a property tax, saying they could simply worsen Latvia's economic crisis.
Despite having said last week that it was set to give ground, the People's Party reiterated its concerns on Monday.
"We are not ready to sign rushed decisions," party kingpin Vents Armands Krauklis said.
Krauklins also fired a warning shot at the EU's economic and monetary affairs commissioner, Joaquin Almunia, who is due in Riga on Tuesday.
"Almunia is not the Lord God," he said.
In Brussels on Monday, Almunia told reporters: "I think the agreements are there to be implemented."
He noted that the bailout's terms had already been revised in June to take into account Latvia's worsening economic situation.
"Now it's time to implement," he added.
Latvia, which broke from the crumbling Soviet bloc in 1991 and joined the EU in 2004, had enjoyed years of robust economic growth before plunging into recession last year. Its economy is set to shrink by 18 percent this year.
|
|
|
Send Article by Email
Send Article by IM
Blog This with Y! 360
Printable View
