| Latvian FinMin plans to reduce costs by 40 pct, save EUR 20 mln |
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| Thursday,April 16,2009 Posted: 19:47 BJT(47 GMT) |
| From:Baltic News Service Article type:Original |
RIGA, Apr 16, BNS - The Latvian Finance Ministry has prepared a costs cut scenario by 40 percent, providing for reduction of expenses as a result of structural reforms by 14 million lats (EUR 20 mln), said the ministry's communication department.
The Finance Ministry has prepared the 40 percent cut scenario as a basic scenario, but other variants, cutting expenses by 30 percent and 20 percent will also be assessed.
The ministry said that, according to the government's decision to cut wages by 20 percent, the ministry plans to reduce its central administration's wage fund by 0.7 million lats. The ministry has been implementing structural reforms since early this year, liquidating work places, revising wages. The average wage for the ministry's employees in 2009 is 30-45 percent lower than in 2008.
Structural reforms will also be implemented in institutions subordinated to the ministry. The planned reductions for the ministry and its institutions amount to 5.6 million lats or 20 percent, and reduction of employees will also refer to all institutions, said the ministry.
The Finance Ministry also plans to turn one of its subordinated institutions responsible for supervision of precious stones and metals into a capital society, considering a possibility to privatize it in the future, which is a common practice in the world. The number of State Revenue Services (VID) employees will by reduced by 1,200 people or 50-70 percent from Nov. 1, while four-day working week will be introduced for other employees.
"The state may not afford spending at the current pace, therefore significant reductions are needed, allowing us to fall in the limits of the available resources. I am thankful to the responsible officials of the Finance Ministry for understanding, preparing the basic scenario for budget cuts by 40 percent. I would like to call on other ministers to pay special attention to preparing proposals for budget amendments," said Finance Minister Einars Repse in a statement to the press.
The new government has launched work at budget amendments and structural reforms. The Latvian government ordered ministries to work out three possible scenarios for further budget cuts by April 17. The proposals for budget cuts must be based on three scenarios, envisaging a 20 percent, 30 percent and 40 percent reduction respectively. The government's aim is by 2011 to reach a budget deficit not higher than 3 percent of the gross domestic product (GDP). Form Apr. 22 till May 15 the Finance Ministry and involved parties will assess the proposals and on May 12 the government is expected to discuss them.
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