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Monday 09.12.2019 | Name days: Sarmīte, Tabita

Cooperation partners blast government for breach of law in budget development

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Latvian Prime Minister Krišjānis Kariņš

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.

Non-government organizations representing education, healthcare and municipalities refer to laws approved by the last Saeima that provide increased funding to specific sectors. However, the Cabinet of Ministers led by Krišjānis Kariņš’s government has not taken any of them into account in the 2020 budget development process.

Young Physicians Association representative Kārlis Rācenis reminds that previously it was promised to increase funding for wages by 20%. «Elections were held and parties promised to double the increase. We understood promises would not be fulfilled, but we nonetheless hoped to get the 20%,» said Rācenis. Representative of physicians stresses that wages of young physicians in Latvia is not competitive when compared to other countries. «We don’t know what to do now, because the funding that was promised is not provided. We cannot accept this,» said Rācenis.

Healthcare Minister Ilze Viņķele stressed that sometimes unfulfilled promises hurt and demotivate more than promises never given. «We are in a situation when a very specific digit was promised and people believed it. This is why emotions are especially high,» said the politician.

Finance Minister explained that wages of physicians is not raised in the promised amount largely because of decreased economic outlooks. «Looking at economic development, we have reduced the state budget revenue plan by EUR 200 million. It is not because someone doesn’t want to increase wages and instead sit on the budget chest,» said Reirs.

Prime Minister Krišjānis Kariņš, referencing initiated reforms, explained that the country is an enormous ship. «Time needs to pass until the ship is able to change course,» says the politician. The prime minister stresses that Viņķele did all she could to increase funding for wages. However, it is necessary to not only invest more money in the system but also sort the system itself.

Inga Vanaga, chairperson of Latvian Education and Science Workers’ Union, urges maintaining existing laws in the budget development process and taking on new initiatives only after the budget has been compiled.

Education and Science Minister Ilga Šuplinska stresses that the budget is not made of rubber. At the same time, she invites the trade union to not pit education and science against industries important to the state.

Justīne Širina, president of Latvian Student Union, says that looking at budget priorities, it is sad for her to see higher education and science are provided such a small amount of funding. «Until now it has been discussed about the need to increase competitiveness. At the same time, no resources are provided. There were a lot of promises voiced before elections. I hope they will come true one day,» she said.

Šuplinska says EUR 8 million have been allocated specifically for science. «I agree it is necessary to look to increase these positions in the next several years. But the current increase provides major improvements for science,» said the minister.

Gints Kaminskis, head of Latvia’s Local Governments Union, is shocked that at least 70% of additional funding for 2020 budget priorities was found at the expect of municipalities.

«The proposal to comply with existing regulations is voiced in this hall a second time. Decisions on funding for priority tasks should be made later. Increase of fiscal space happened at the expense of municipalities, and this is unacceptable. This is why we invite the government to make the decision after consulting with municipalities,» stresses Kaminskis.

According to minutes from the government’s 13 September meeting, the Cabinet of Ministers has supported the proposal to ensure grants for municipalities are not below EUR 148.1 million, even though a week ago this amount was EUR 157 million.

Additionally, at the 13 September meeting the government supported the proposal to change gambling tax revenue split between the state and municipalities (78% for the state and 22% for municipalities in which gambling halls are present).

Latvian Employers’ Confederation representative also expressed shock over the government’s decision to increase minimal wages without first consulting with social partners. The organization stresses that regulations state that all changes to taxes have to be discussed with social partners.

After the meeting, during the Q&A session, the prime minister told media representative that sometimes the Saeima makes decisions with good intentions, ignoring options in the process. «I take responsibility over everything the government can financially take on to avoid raising taxes and worsening the country’s financial situation,» said the prime minister.

As previously reported, on Friday, 13 September, the cabinet of ministers decided on the use of EUR 192.4 million among priorities of ministries and independent institutions.

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