RIGA - Latvian businesses are bracing for further decline in the country's economic situation following double elections on June 6.
Business owners The Baltic Times spoke to expressed a lack of trust in government, saying it was likely the election would bring higher taxes, increased expenses and a continued unresponsiveness from state officials.
Anita Kaleja, the chairwoman of the Board of Chamber of Commerce in Latvia, said that it remained hard to find new ways of doing business or plan any long-term strategies due to continued uncertainty in the external enviroment.
"We do not expect any good from elections on June 6. We only hope to hear the whole truth, no matter how bad it is. Uncertainty is the most dangerous thing in the business environment. It is difficult to make plans for the next year when you do not know what might happen tomorrow," Kaleja told TBT.
"If the government would just share the true and full information with us, we would prepare for harsh times: make some optimizations, cut expenses and make better decisions concerning labor. However, all we get is rumors and that does not add to our confidence," she said.
RAW DEAL
Both local city council and European Union Parliament elections are due to take place in Latvia on June 6. Pre-poll campaigns are heating up and the streets are filled with posters of smiling candidates promising to fight bureaucracy, support small and medium enterprises, encourage public-private partnership projects and generally make life easier for those engaged in business.
However, the mood on the receiving side remains pessimistic.
Elina Egle, Director General of Employers' Confederation of Latvia, said since municipal budgets are almost depleted, it is likely the government will impose new taxes and dues on business to cover their costs.
"The general strategy of cutting costs may lead to city councils terminating some functions that are important to business or at least charging more for their services. As government subsidies to municipalities will be decreasing, city authorities will be inventing new ways of getting income," Elina Egle said.
Kirov Lipman, chairman of the Council of Grindeks, a leading pharmaceutical company in the Baltic States, said the government had long ignored opinions of businessmen concerning the country's economic strategy. He said this had resulted in unwise tax policies harmful to both the private and public sectors.
"It is hard to predict what can happen, but there is a chance that VAT will be increased again [As of January 1, 2009, VAT was increased from 18 percent to 21 percent]. It seems that government officials are mathematicians, who only know how to add or subtract and do not care about impacts that numbers may have on the economy…It is hard to get surprised these days," he said.
However, despite the gloomy prognoses, Lipman believes complaining about the current crisis would not solve anything and that businesses should continue to strive to find new ways and opportunities to get ahead.
