• 2008-09-18

'THIS WILL SOLVE OUR MONEY PROBLEMS': Smash and grab is becoming fashionable in Latvia.

The old, the poor and sick and vulnerable are going to suffer. Anybody who earns an honest living earning providing the services that we all need 's teachers, nurses, policeman, firemen, and immigration officers 's will struggle too. Everybody will suffer because services will be stretched.

As we report in this week's paper, Latvian Prime Minister Ivars Godmanis proposed freezing all public sector wages 's though he later reopened negotiations on the topic after the Free Trade Union of Latvia threatened strikes and said the country would descend into "chaos" if he tried it. The prime minister also said ministries would have to cut their staff by 5 percent and decrease expenditures by 10 percent.

Meanwhile in Estonia, Trade Unionists and opposition leaders have called foul over the government's plans to squeeze public services and cut benefits whilst at the same time raising stealth taxes.
Estonia has already slashed its budget  by 6 billion kroons (320 million euros).  The government is now curtailing expenditure  to keep the budget balanced at 90.2 billion kroons.
Meanwhile, the bean counters in the right corner want yet more cuts.  On Sept. 16 Andres Lipstok, governor of the central bank, cautioned the government to stick to a balanced budget.
The Estonian government is preparing the budget for 2009. In order for a budget  deficit to be allowed the law has to be changed.

In Latvia, on the other hand, the government has accepted the inevitable. They had hoped to get a 1.2 percent surplus next year, but thanks to the economic crash that is not even close to possible. The new proposal is for a 1.85 percent deficit in 2009.
Let's be clear, the governments of the Baltic states are trying to cut services, freeze wages and raise taxes not because of some natural disaster. It's not even really because of the credit crunch. The cut backs are happening because either the ministries of finance got their numbers wrong, or the governments chose to ignore the reality of the situation.

Why can't the Baltic states balance their book? If you were running a business like this, the shareholders would have grounds to throw out the entire management. If a wife were running the household accounts in the same way her husband would divorce her.

The economic crisis began over a year ago but the finance ministries refused to listen to the warning signs coming from international rating agencies, economic analysts and think tanks 's basically anybody in the know.
 It was only a few months ago that Estonian Prime Minister Andrus Ansip was in denial that there was any economic crisis at all. Instead he was still talking about catching up with Old Europe and Estonia being in the top five wealthiest nations in Europe in the next five years.

It seems the political elite across the region have their priorities wrong. Obsessed with questions of national pride and national advancement they forgot that a government's job is to make sure that people who elect it and whom they are  supposed to serve should have their needs taken care of.
So if Balts are cold and hungry this winter, they know who to blame.