Drastic cuts may be the last

RIGA - Finance Minister Einars Repse (New Era), following an Oct. 29 meeting with President Valdis Zatlers on the course of drawing up the 2011 national budget, said that it may be the last one with mandatory cuts; future deficit consolidation will be guaranteed at the expense of growing revenue, reports news agency LETA. According to Repse, next year’s budget could be the final one with tough decisions. Further consolidation measures will be easier because most of the problems have been solved.

Repse was unable to say specifically how large the budget’s consolidation will be, pointing out that this is still to be discussed with the international lenders and that the signed agreements must be taken into account, adding that consolidation has been set at 395-440 million lats (628 million euros). If drastic proposals are prepared now, “it will be easier for us later,” he pointed out. There is a good foundation to believe that the situation will be more positive, and “certainly it won’t get worse,” he claimed.

The government will attempt to approve the 2011 state budget by the end of this year; however, in the event of lengthy work on major structural reforms, the passing of the budget could be delayed, said Unity’s finance minister candidate, economist Andris Vilks, in an interview with the business portal Nozare.lv. Vilks expressed the hope that the new Saeima and Cabinet would be successful in working together to find ways to curb spending by optimizing and streamlining state functions. As areas which would be prioritized for reform, Vilks mentioned education and health care, as in his view, both of these are in need of a shakeup.

“For example, we must analyze the flow of money in the health care sector, and decide whether the current system is really necessary. Perhaps we could work in another way,” said the economist.

“If we feel that we can provide society and the business community with a better budget, it will be worth waiting longer; however, if we do not see some kind of benefit, there would be no point in wasting time and waiting until January or February. I hope that the government, Saeima and the social partners will be able to create a common vision of structural reforms so that it will not be necessary to think about taxation in such narrow ways,” explained Vilks.