It Is a High Price For a Help

At the end of the last year International Monetary Fund (IMF) approved a 1.68 billion euro rescue loan for Latvia. Representative of IMF says that this was one of the largest loans ever offered by the Fund. Czech Republic, Poland and Estonia contributed 400 million euros to the bailout. The loan will cost 3, 000 euro for every Latvian.

Latvia had to take the loan as they haven’t saved money for hard times – all budgets were without any reserves and fact that all around the world companies had troubles with managing short term financial problems somehow influenced country too.

Already at the end of the last year Latvia got from the IMF the first part of the loan – 589,60 milliards euro.
Latvia got the first 1 milliard euro from European Commision, they have confirmed that the total amount of loan will be 3,1 milliards euro.

The largest amount of rescue loan will be invested stabilizing finance sector:
36% -- goes to finance sector stabilization (in March government decided to give 232,5 millions euro to help “Parex” bank to pay their credit)
35% -- will go to cover government budget deficit
21% -- is for to refinancing the government debt
8% -- covering government budget loans

This doesn't seem as as a good rescue plan for country; the government is being criticized for not being able to set priorities for national economy. Experts say government should invest money in developing manufacturing industry, not in saving banks.

European Commission is carefully following Latvian government actions and also currently advice them on budget savings/changes.

-20% or not -20%

To reduce public budget deficit PM Valdis Dombrovskis (first on right) in the beginning of March announced that average salaries in a public sector should be reduced by 20%, the only exception could be health care system where salaries could be reduced by 10%.

However, after today's morning meeting between PM Valdis Dombrovskis and minister of justice Mareks Segliņš (third from left), as well as prosecutor general Jānis Maizītis (second from left), M. Segliņš announced that probably there wont be any reduces in justice system. Mr. Segliņš said that PM carefully listed to the arguments brought to him, thus Mr. Segliņš believs that it would not be reasonable to reduce salaries for courts and public prosecutors. Prosecutor general, however, admitted that its possible to reduce salaries, but reduction definitely should not be -20%.

This news probably will get wide public attention, especially from the policemen and teachers side, who are not satisfied with the reduction of their salaries.

On the 2nd of April there will be protest walk by Latvian teachers in Riga's streets. Right now prognosis is that there might be approximately 6000 teachers.

Info from tvnet.lv and diena.lv

Magic 21

With the 1st of January 2009 new VAT in Latvia is 21%, instead of previous 18%. This was a big shocker for many people especially because life became even more expensive in this not so easy moment.

I am not an economical scholar, however, I remember some things from school times and if I am not mistaken then tax cuts should be for stimulating economical growth, especially now when unemployment is high and people cannot afford to pay back their loans.

Nevertheless, previous government raised VAT in hopes that it would bring more money... and now new government, lead by Valdis Dombrovskis, has admitted that VAT increase has not justified itself, because income from taxes has decreased by 23%. V. Dombrovskis said that his government wont stick to I. Godmanis plan, which suggested in the course of time to increase VAT even higher. PM thinks that country should get back to lower taxes, however, it wont happen this year.

European Commission thinks that decreasing VAT in some sectors, such as clothing, social services and others, would help getting European economics from crises. EU cannot make the participant countries to do one thing or another about their taxes, however, it can suggest ways how to achieve better results.

There are only 5 EU countries which have higher VAT than Latvia (DK-25%, FIN-22%, IE-21,5%, PL-22%, SE-25%).


http://www.db.lv/a/2009/03/13/PVN_paaugstinashana_Latvij?open=sec
http://www.tvnet.lv/onlinetv/lnt/900_sekundes/article.php?id=334375

Happy To Share Our Kitchen With You

We apologize for being late with our welcoming-introduction blog entry. As you (dear reader) probably know people don’t happen to do things without the reason, neither do we. As we are taking the Media Relations course (lecturer Kristel Sarapuu) then starting our own blog is one of the class assignments.

Actually we have tried blogging already for few times, but somehow our personal blogs were projects with short lifetime (Viktorija wrote about her Erasmus time in Denmark and Aiva was writing a blog about moving to Estonia), but the blog you are in now is in fact a unique project. It’s being managed by us - two Latvians, who happen to be worried about the political situation in their country. However, political crisis in Latvia has influenced us in a positive way – our interest in politics has risen significantly and at this point we would like to think that we are becoming more educated voters.

By the way, we will use this blog as our kitchen for experiments. We are ready to be wrong, to be misled and to have troubles cooperating, but one thing we can promise that we will never give up trying to deliver you the most delicious taste of our writings.

Kitchen has always been a very special place in every household, hopefully we will be able to make your staying in our kitchen as comfortable as possible and that you will be happy to return. But to be great chiefs we need to know your reading habits, so please don’t think twice to post or not to post, don’t leave without any comment – you will benefit from that – the next time you are coming back we will be able to serve you better articles. And finally – warm welcome and please enjoy being here!

PS. We also apologize for keeping our kitchen so silent for so long, we have good excuses for that :) Aiva spent great time being an intern in the best media agency in Latvia and Viktorija were exploring Belarus (upon your request we will be glad to share our different experiences).