Brussels, 10/06/2009 (Agence Europe) - The Prime Minister of Latvia, Valdis Dombrovskis, has confirmed to José Manuel Barroso and Joaquín Almunia that he intends to carry out major budgetary cuts in order to fight the worsening situation of public finances and thus continue to benefit from the international support plan for the country's economy (EUROPE 9914).
The Latvian government has decided to make a further budgetary adjustment of 500 million lats (€716 million) to its supplementary budget 2009, Mr Dombrovskis announced after his meeting with the president of the Commission and the commissioner for economic and monetary affairs, on Wednesday 10 June. The commissioner welcomed the political agreement made the day before and expressed his hopes that the Latvian parliament would adopt this budgetary revision next week. "We are convinced there is no alternative" to these drastic budgetary measures, declared Mr Almunia. This cut in expenditure should help to reduce the deficit which is threatening to reach 9.2% of GDP this year, instead of the 5% forecast in the international support plan approved late last year and to which the EU is contributing €3.1 billion (of a total of 7.5 billion).
Once the budgetary adjustment has been approved by the Latvian parliament, the Commission will be able to make a decision, by the end of June, to release the second tranche of the loan, the commissioner continued (an initial payment of one billion euros was made at the end of February). "On top of this, clear commitment is also needed by Latvian political forces to continue this adjustment towards the object of fulfilling the conditions to join the euro. And this requires in 2010 clear commitments for an equivalent amount of 500 million lats", Mr Almunia added. (A.B./transl.fl)