RIGA — Latvian lawmakers wasted no time in moving the much-aligned 2010 budget, approving it in parliament in a first reading Thursday by a wide margin.
Sixty-four MPs backed the bill, while 32 voted against and one abstained. The vote suggested that the budget, on which further international support for recession-hit Latvia hinges, will have little trouble sailing through the legislative branch.
The Latvian parliament also supported draft amendments to 66 laws and three draft laws related to the budget, according to the press department, while the second and final reading of the budget will take place on Dec. 1.
Speaking to the Saeima before the vote, Prime Minister Valdis Dombrovskis admitted that the budget was imperfect. “I have no illusions, and I am aware that no one will be completely satisfied,” he said.
Education, health, social security and public order consumed the most time in discussions leading up to the presentation of the budget, the prime minister said.
He also stressed that the budget was unique in that it reclassified government functions according to international criteria and involved, from the very start, the active participation of so-called “social partners” — free trade associations and chambers of commerce whose members are particularly vulnerable to steep spending cuts.
Dombrovskis once again refuted the idea that a devaluation of the national currency would help Latvia recovery from its worst recession on record.
“Latvia is very small and open economy. It means that the possible benefit of a devaluation would be very short and insignificant, since prices of imported energy sources and components would automatically increase,” he said.
“Even worse, by devaluing we would lose the ‘light at end of the tunnel.’ We would not be able to implement the exit strategy: to join the eurozone in 2014.”
The prime minister also said the government was continuing to streamline its operations. The amount of government agencies will be cut from the current 76 to just 25.
The government also plans to reduce the number of bureaucrats and public sector workers by 29,000, around 8 percent of the working-age population. Currently 9.1 percent of working-age people are on government pay, Dombrovskis said.