Budget Cuts
June 18, 2009
Health Minister Ivars Eglitis said in a statement that he had resigned because he refused to support cuts to spending for Latvia's health system, which could lead to job cuts and hospital closures.
"As a doctor and a healthcare specialist I cannot accept this," Eglitis said in a statement.
The health cuts are part of a wider package of measures approved by parliament on Tuesday. The Latvian government hopes to cut the budget by 500 million lats (715 million euros) to help it meet the terms of a 7.5-billion-euro bailout from the International Monetary Fund (IMF) and the European Union.
The government's budget cutbacks include a ten percent reduction in pension payments and a drop of 20 percent in wages for teachers, policemen, and firemen. Teachers say, however, that their pay cuts amount to 40 or 50 percent, and on Wednesday, the teachers' union called on the education minister to follow the health minister's lead and also resign.
On the brink of bankruptcy
Prime Minister Valdis Dombrovskis says the loans from the IMF and the European Union will stop Latvia from going bankrupt. The prime minister also says the spending cuts are better than being unable to pay wages and other bills altogether.
Latvia has been one of the worst hit European countries during the current economic downturn. The Finance Ministry revised its economic outlook downwards on Wednesday, predicting that the country's economy will shrink by 18 percent this year.
There have been fears that Latvia's economic problems could lead to a devaluation of the country's currency, which is pegged to the euro. The prospect rattled eastern Europe's financial markets recently but the government's budget cuts are now helping to ease those fears.
Author: ca/AFP/dpa/Reuters
Editor: Mark Hallam