Lembergs complains of ‘non-transparency’

RIGA - The review mission of the European Commission and International Monetary Fund rolled into town on April 5 to begin work on analyzing implementation of the memorandum of understanding concluded with Latvia and to reach agreement on amendments to the memorandum, as well as discuss budget consolidation and structural reforms with government representatives, reports news agency LETA. Members of the EC and IMF review commission plan to meet with government, Bank of Latvia, Financial and Capital Market Commission and other officials in Riga.

On April 4, Prime Minister Valdis Dombrovskis (Unity) said that the government has reached agreement, in principle, with the international lenders on amendments to this year’s budget. The government hopes to receive final approval during the meetings.

The international lenders have previously made it clear in talks with the Latvian government that they would like the government to set more ambitious goals for next year’s budget – the lenders suggest reducing the deficit to below three percent of gross domestic product, which would mean a steeper reduction in the deficit than currently planned.
According to the amendments, budget revenue will increase 102,049,510 lats (145.7 million euros), reaching 4.2 billion lats this year. The projected budget expenditure has been increased by 19,903,268 lats to 4.7 billion lats.
The consolidated budget deficit, calculated according to the international ESA methodology, is planned at 4.2 percent of gross domestic product. This does not include the government’s plans against the shadow economy which, if successful, will reduce the deficit to 3.8 percent of GDP.

So far, Latvia has received 2.9 billion euros from the European Commission and 200 million euros are still available this year.
Reversing an earlier stance, Finance Minister Andris Vilks (Unity) after the first meeting with the lenders on April 5 said that Latvia won’t ask to push the deadline forward for repayment of the loans. Vilks said that prolonging debt repayment would not be in Latvia’s interest, because loan conditions would change and interest rates raised.
Latvia will instead borrow money on foreign markets to restructure its debts, said the minister, who believes that the improving economic situation will present Latvia with good borrowing conditions.

Ventspils Mayor Aivars Lembergs (For Latvia and Ventspils), who is facing charges of corruption and other serious crimes, got his two cents in on the discussion, calling Latvian officials “lackeys” in an interview on the LNT morning program ‘900 sekundes’ on April 5.

Saeima Budget and Finance Committee Chairman Janis Reirs (Unity) previously doubted that Lembergs would be able to convince the international lenders. Lembergs, however, believes that it is necessary to try and persuade them. “If you don’t do it, do not expect anything to be handed to you on a silver platter,” said Lembergs.
Lembergs pointed out that his goal is to provide assistance to Prime Minister Valdis Dombrovskis (Unity), not criticize the Latvian government. “The talks are lead by the premier and finance minister, not by me. I will express my opinion, my political vision. I cannot negotiate but I will try to persuade,” explains Lembergs.

He emphasizes that he will try to convince the lenders to prolong the international loan repayment. The Ventspils’ mayor will also try to prevent any pension cuts or reductions in pension supplements. The sides will also discuss re-channeling the 600 million lats loan to other goals.

The mayor said that he would also tell the international lenders that the state budget was non-transparent and poorly structured. “I will tell them that increasing the 2011 budget’s spending by 51 million lats from 2010 is unacceptable. I will tell them that 1.1 billion lats is earmarked in the budget for utilization of Europe’s structural funds, but unfortunately, the Finance Ministry has only been able to explain where 770 million lats of this amount will go,” said Lembergs.

The meeting was to take place at the European Commission Representation in Riga on April 6 at high noon.