RIGA - The politicians will not talk about the unpopular budget consolidation measures until the 11th Saeima elections are over, says Nordea bank chief economist Andris Strazds in an interview on Latvian State Radio on Aug. 5, reports Nozare.lv. Therefore, the actual 100-110 million lats (142.8 – 157.1 million euros) budget consolidation measures could become known in October or November, together with the 2012 budget’s progress in Saeima.
Strazds emphasized that the budget consolidation measures must be carried out mostly by reducing expenditures. He believes that there are still many middle-class, and even wealthy, residents in Latvia who receive benefits even though they do not really need them. At the same time, there are people who really need such benefits.
The economist also believes that the number of information systems in the state administration could be reduced, ensuring their compatibility and limiting their maintenance costs.
Strazds pointed out that, currently, Latvia’s macroeconomic forecasts are drafted by three institutions - the Bank of Latvia, the Finance Ministry, and the Economy Ministry. “We will not be able to save millions here, but these three institutions each have their own forecasts. It would be better if there was only one, but qualitative forecast from the state sector,” said the economist.
On July 29, Finance Minister Andris Vilks (Unity) said in an interview with the LNT morning show ‘900 sekundes’ that the term “consolidation” will disappear from people’s vocabulary in 2013. The Finance Ministry predicts that the state budget will be consolidated by 100-110 million lats in 2012.
Vilks was optimistic about Latvia’s economic development and tax collection, pointing out that the amount by which the budget must be consolidated decreases with each passing month, and it is now possible to discuss milder austerity measures. At the moment, state budget revenue exceeds the projected figure and will traditionally increase in the second half-year.
The minister pointed out that the budget situation has improved not only due to the economic recovery, but also due to the active combat against the shadow economy.
Latvia must continue carrying out budget consolidation measures, emphasized Vilks. The minister was also concerned about the situation in the global economy - in the United States and several European countries.
Asked whether the planned austerity measures will include wage reductions and job cuts in the state administration, Vilks emphasized that wages should not be reduced; however, the number of employees in several institutions is too high.
The minister added that next year’s budget will have no surprises and taxes will not be raised.
Due to the referendum and the emergency Saeima elections, the Finance Ministry has requested the government to extend the dates set for drawing up the 2012 national budget. The ministry proposes to push the deadline forward to end-2011.