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BNN summary of the week: Latvia’s biggest budget; PNB Bank halts operations; Latvia sad with Latvia

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Some positive news surfaced in Latvia this week – Prime Minister Krišjānis Kariņš announced that the country’s next budget will be the largest one yet and will exceed EUR 10 billion. In spite of this, however, financial difficulties have been observed – PNB Bank has ended up in a tight spot. The bank’s shortage of funds has forced Finance and Capital Market Commission to halt all of the bank’s financial operations.

Meanwhile, Lithuania’s President Gitanas Nausėda voices his sadness over Latvia’s decision to purchase energy that will be produced by Astravyets nuclear power plant in Belarus, in an area not far from the border with Lithuania. He admits, however, that this was not unexpected.

Estonia has plans to reform its pension system, but no pension growth is promised.

BNN offers you a summary of the most topical developments of the week, including topics such as: Growth, Decline; Decision; Fight, Change; Disappointment; Explanation; Concerns.

GROWTH:

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Latvia’s Prime Minister Krišjānis Kariņš

Prime Minister says 2020 budget will be Latvia’s largest one yet

The next year’s budget will be the largest in the history of Latvia and will exceed EUR 10 billion, said Prime Minister Krišjānis Kariņš in an interview to public broadcaster LTV programme Rīta Panorāma on Wednesday, 14 August.

The prime minister said that thanks to economic growth the budget will have increased EUR 500 million.

Commenting on slower economic growth, Kariņš said there is no reason for concerns – even if rates become slower, the economy continues growing. Nevertheless, funding increase brings with it other problems – ministries’ needs remain unchanged and budget money is more often viewed as a possible solution to resolve long-postponed problems. However, there are more needs than the budget can afford, the prime minister explains.

He admits that if had the final say in this, expenditures would be reduced and money would be reserved for «Black Friday». Unfortunately, the government is not prepared to do this and there is also the need to satisfy «legitimate interests of coalition partners».

More here

DECLINE:

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Shortage of workers in Latvia’s Emergency Medical Service remains serious

The shortage of workers in Latvia’s Emergency Medical Service (EMS) remains serious, and yet the service is able to deal with all challenges, said the service’s head Liene Cipule in an interview to public broadcaster LNT programme 900 seconds.

She stresses that there is a shortage not only in the emergency medical service but also the entire healthcare industry. This means the problem cannot be easily resolved using worker rotation. «We have to consider possible solutions – efficiency and quality – to compensate the shortage of resources with other methods,» says Cipule.

One of the solutions was the single-medic ambulance brigades, which had answered 7.5% of all calls for assistance in the first half-year of 2018. According to Cipule, work with single-medic brigades has proved that the service is able to sort calls based on priorities and such a concept does work.

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DECISION:

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Another one falls – Latvian FCMC halts PNB Bank’s operations

Operations of PNB Bank [formerly Norvik Banka] have been halted in Latvia, as confirmed by Finance and Capital Market Commission (FCMC).

The decision made by the commission provides for the bank to completely cease providing financial services, including completion of clients’ payments as of 21:00 on Thursday, 15 August. This measure was applied to prevent outflow of the bank’s finances.

FCMC reports that operations of PNB Bank were halted and deposits made inaccessible in accordance with decisions made by European Central Bank and Single European Resolution.

«On 15 August European Central Bank as the direct supervisor of PNB Bank decided to declare this institution as one that has either ended up or will end up in financial services. The Single European Resolution’s board has made the decision to not perform regulation of PNB Bank. This means performing no measures to stabilize the bank’s operations. Considering the aforementioned and to ensure security for the bank’s deposits, FCMC council has decided at a meeting to halt financial operations in PNB Bank and has decided on inaccessibility of deposits,» the commission says.

European Central Bank has made its decision having found that the bank has not complied with regulations and after having assessed the bank’s financial situation.

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CHANGE:

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Estonia decides to reform pension system; increase not promised

Helir-Valdor Seeder, leader of Estonian coalition party Isamaa, has confirmed that the government has agreed on his proposed pension reform, as reported by Estonian public media ERR.

Estonian Centre party, the Conservative People’s Party of Estonia (EKRE) and Isamaa have agreed to make the «second pillar» of Estonia’s pension system optional. The system in place since 2010 that provides for employees paying 2% of their wage to equalize their employer’s contribution (the so-called first pillar) is compulsory. Its critics say this system no longer matches the economy and that people should have more control over investment opportunities, including private pension funds (third pillar).

Abolishment of the «second pillar» was one of Isamaa party’s main promises during parliamentary elections. The government is now preparing to submit to the parliament a draft that would allow employees to choose to opt out of the ‘second pillar’. The vote on this topic could take place in autumn 2019, which means the law could come to force at the beginning of 2020.

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DISAPPOINTMENT:

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Lithuanian President Gitanas Nausėda

Lithuanian president unhappy with Latvia’s decision to purchase energy from Belarus

Lithuanian President Gitanas Nausėda has voiced sadness over Latvia’s decision to purchase electrical energy produced at Astravets nuclear power plant in Belarus not far from the Lithuanian border. He admits, however, that this decision was not unexpected for him.

According to Nausėda, Latvia made this decision without consulting with Lithuania’s Energy Ministry.

«Latvians made a political decision. As far as I am aware, there had been some consultations with Lithuania’s Energy Ministry, but the decision was made before consultations were concluded, which is why the only thing left in this situation is regret,» he told journalists in Berlin on Wednesday, 14 August.

Lithuania, which considers Astravets NPP unsafe, had previously hoped a boycott of its energy would help halt this project. However, other countries in the region and European Union institutions did not support this initiative.

In an attempt to reduce the risk for possible reduction of electrical capacity or negative tariff fluctuations, the Cabinet of Ministry supported Economy Ministry’s proposal on organization of energy trade with third countries, which provides for transferring energy trade to Latvia’s border «the moment when Lithuania will have ceased electricity trade with Belarus».

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EXPLANATION:

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Riga City Council permitted to elect mayor after two-month deadline

In spite of the fact that 21 August will mark two months of Riga City Council working without a mayor, a condition that permits Latvia’s Saeima to dismiss the entire city council, deputies of the municipality will nonetheless have the right to elect a mayor after the deadline, says Environment Protection and Regional Development Minister Juris Pūce’s advisor for legal affairs Valdis Verners.

If a city council works without a chairman for two months, the Cabinet of Ministers can initiate a request for the Saeima to dissolve such a city council. Nevertheless, even after the deadline members of the city council will still have the right to elect a new mayor because they do not lose their status, he explains.

«In accordance with the Law on Local Governments, they are able to hold city council meetings and make decisions, including the political decision on election of a new city council chairman,» explains Verners.

If a new chairman is elected, the Saeima loses its right to dismiss the city council.

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FIGHT:

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State Real Estate claims ReRe Būve 1 may be trying to circumvent the law

Construction company Rere Būve 1 publicly voices desire to continue implementing the construction contract. However, the construction company’s submitted work schedule for reconstruction of New Riga Theatre has everything changed – volume of work, terms and budget, Latvian State Real Estate (SRE) reports.

«If major conditions of the contract change or increase, SRS believes the construction company thereby wants to sign a new contract without a tender instead of continuing the existing one,» stresses SRE board chairman Andris Vārna.

«This makes it possible to believe it could be an attempt to circumvent the Public Procurement Law. SRE cannot allow this.»

On top of that, Rere Būve 1 refuses to voluntarily leave New Riga Theatre construction site. SRE believes Rere Būve 1 may attempt to secure a ban on future construction work on New Riga Theatre.

SRE also notes that with the schedule Rere Būve 1 expects not only extension of the term from two years to four but also an increase of necessary funding. The new proposed plan also includes tasks that were carried out before. This includes construction of trolleybus contact lines. According to the construction company’s offer, this is planned to be done in April and September 2020. In reality, this task has already been accomplished and all relevant documents have been signed, SRE reports.

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CONCERNS:

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SRS Tax and Customs Police director Kaspars Podiņš

No shame. SRS Tax and Customs Police used for political hits – employees say

Performing different orders, score-settling, double standards, distortion of facts – such criticisms have been directed to State Revenue Service’s Tax and Customs Police Department director Kaspars Podiņš by the institution’s employees in their letter to SRS director general Ieva Jaunzeme.

«We turn to you with an application because at the beginning of the year the entire team had witnessed director Kaspars Podiņš performing different political orders, preventing investigations of commenced criminal processes and punishing workers who refused to comply,» the letter mentions.

«Every day we have to face his double standards and fact distortion. On top of that, without any shame whatsoever, SRS Tax and Customs Police are used to perform political orders.»

The letter also mentions that more and more often the press voices concerns about political involvement of state law enforcement institutions and their use in political score-settling. Jaunzeme also received some blame – instead of acting, she is accused of saving her own skin, so to speak.

«While you are too busy fending for yourself, seen and unseen people in Tax and Customs Police Department’s corridors are organizing criminal processes left and right.»

SRS employees described an entire scheme in the letter: «A brief explanation about this system for those uninformed: person-X issues a request for a criminal process; to commence it there have to be an unlikely report detailing suspicious dealings, partners or at least a story, no matter how stretched and baseless, that there could be signs of illegal activity.

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BNN summary of the week: state of emergency in Riga; seat for Dombrovskis; politics in construction cartel

At a speedy pace – this is how the emerging crisis in waste management was being prevented in Riga this week. Prime Minister Krišjānis Kariņš gave Riga City Council a bashing, saying that Riga is attempting to pass on its problems on the shoulders of the entire country. The prime minister asked the capital to settle its own problems. Nevertheless, the government declared a state of emergency in Riga.

Cooperation partners blast government for breach of law in budget development

On Friday, 13 September, multiple cooperation partners of the Latvian government blasted the Cabinet of Ministers for breaching the law in the development of the 2020 state budget.

Hourly labour costs in Latvia up 8.9%

Compared to Q2 2018, hourly labour costs rose by 8.9 % or 79 cents, reaching EUR 9.60 in Q2 2019. Seasonally adjusted data show increase of 7.0 %.

Latvian Justice Ministry insists on improving prison infrastructure

In regards to the topic of the state budget’s fiscal space in 2020 and expenditures for priorities, Latvia’s Justice Ministry insists on maintaining its position in regards to Liepaja Prison’s construction project’s necessity.

UK’s parliament speaker ready to prevent October 31 no-deal Brexit – a violation of law

In the Brexit saga, speaker of a parliamentary chamber has pledged to permit changing the rules of procedure to keep UK Prime Minister Boris Johnson from forcing a no-deal Brexit on October 31, seen as a potential violation of law.

Latvian government allocates more than EUR 192 million for priority tasks

On Friday, 13 September, Latvia’s Cabinet of Ministers decided at an extraordinary meeting on division of EUR 192.4 million for priority tasks of ministries and independent institutions.

Lithuanian shops using increase in wages to raise prices, analyst asserts

In Lithuania, inflation has been two times faster in 2019 compared to other markets in the euro area. Economist Žygimantas Mauricas believes retailers have used a surge in wages to increase prices, especially in grocery stores.

Beneficial owner status in a company does not always involve receiving material benefits

If a person is declared as a company’s beneficial owner, it does not always mean it is a person who is at the end of the chain and receives material benefits from companies.

Prague to move Soviet army Marshal, despite death threats to Mayor

In the Czech capital of Prague, a local government has decided to take down a monument devoted to a Marshal of the Soviet Union. It is planned to replace it with a memorial of a more general meaning.

Estonia to establish cyber diplomacy body to make its voice heard globally

In Estonia, where the authorities may much attention to computed technology solutions and the e-environment, the Foreign Ministry plans to open a Cyber Diplomacy Department.

Latvian court declares PNB Bank insolvent

Riga City Vidzeme Suburb Court has declared PNB Bank insolvent, as confirmed by Finance and Capital Market Commission. Vigo Krastiņš has been approved as the bank’s insolvency administrator.

Latvian government conceptually supports ban for municipalities to run mass media

Municipalities are planned to be applied with a ban to found and publish mass media, as provided by Saeima’s Human Rights and Public Affairs Committee’s supported amendments to the Law on Press and Other Mass Media, as confirmed by Saeima’s press-service.

Spain’s flash floods claim lives

Several parts of Spain have been hit by heavy rain, floods and a tornado. The natural calamities have claimed not less than two victims.

UN representative criticizes Latvia for unwillingness to sign Istanbul Convention

Latvia still has not ratified European Council Convention on Prevention of Violence Against Women and Domestic Violence, otherwise known as the Istanbul Convention, even though it is a major tool for combating domestic violence, said UN Committee on the Elimination of Discrimination Against Women representative Ana Peláez Narváez.

Round dance over? Latvian government agrees on 2020 budget in spite of difficulties

Judging from the last talks held by parties it can be concluded the coalition has reached an agreement on the state budget, said Attīstībai/Par! co-chairman Daniels Pavļuts.

Anrijs Lembergs’ lawyers start reading his client’s court debate speech

Riga Regional Court, which continues viewing the criminal case involving suspended Ventspils Mayor Aivars Lembergs, has started listening to the debate speech of Lembergs’ son Anrijs Lembergs.

Seimas elections in three districts deal a blow to ruling LFGU, Social Democrats’ leader

As two prominent TV faces are set to win the runoff elections to take vacant seats left in Lithuanian parliament after two MPs swapped their parliamentary jobs for mayoral stints and an independent MP, Aušra Maldeikienė, left for Brussels as europarliamentarian, the Lithuanian Social Democrats’ leader, Gintautas Paluckas, who is former vice-mayor of capital city Vilnius, is restless.

Three and a half months left for compulsory installation of smoke detectors in Latvia

Latvian residents are expected to install smoke detectors in their homes – private houses and apartments – by 1 January. For private homes, however, there is an additional requirement – owners are expected to have fire extinguishers on hand as well, reminds State Fire and Rescue Service.

Times ranking: Tartu University – by far best in Baltics

The latest Times Higher Education ranking of the leading large higher education institutions in the world, the University of Tartu has been placed in the group of 301-350 best. Other Baltic universities followed in the group of 801-1000.

Latvia’s high-rank politicians may be involved in scandalous construction cartel

Names of a dozen current and former well-known Latvian politicians are mentioned in the so-called construction cartel criminal case, including Finance Minister Jānis Reirs, politician Edgars Jaunups, former finance and economy minister Dana Reizniece-Ozola, ex-chairperson of Unity political party Solvita Āboltiņa and Saeima deputy Jānis Urbanovičs, Ir magazine reports.

Citadele Bank finances Virši-A petrol station network’s expansion

With financing from Citadele Bank, petrol station network Virši-A plans to expand by opening four more petrol stations. Two of them will provide condensed natural gas.

Catalan independence march in Spain attended by 600 000 people

In Barcelona, around 600 000 people have taken part in an annual march to demand the independence of Catalonia, the autonomous region of Spain.

Government finds money to compensate pension delivery tariff rise

Money to compensate tariff increase for home delivery of pensions has been found, said Welfare Minister Ramona Petraviča during a Saeima meeting.

Lithuania warns about end in rapid wage growth

«The summer will not last forever,» said Lithuanian Finance Minister Vilius Šapoka about a summary of official economic forecasts, which warn that after a fairly rapid growth, national economy and wages would grow at a somewhat slower pace.

Latvian government declares state of emergency in Riga’s waste management sector

In spite of Competition Council head Skaidrīte Ābrama’s statement and Prime Minister Krišjānis Kariņš’s confidence that the government has no need to become involved in Riga’s waste management problem, because it is in the hands of Riga City Council, ministers have nonetheless decided to support Environment Protection and Regional Development Ministry’s proposal to declare a state of emergency in Riga.