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Latvian report Latvian report
by Euro Reporter
2010-12-18 10:31:04
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In brief

The three Latvian helicopter pilots released by Sudanese kidnappers last week have returned home to Latvia, reports LETA. The three Latvian citizens, who were kidnapped in Sudan’s troubled region of Darfur more than a month ago, were released on Dec. 8, said World Food Program spokesman in Sudan Amor Almagro. The UN World Food Program (WFP) said that it had been working tirelessly together with the governments of Sudan and Latvia to have the three Latvian citizens freed, and is now very happy that this has finally happened. The Latvian government had entrusted the release of the hostages to the WFP, and previously said that Latvia, same as the UN, would not offer ransom for the three Latvian citizens. The Foreign Ministry said that no ransom had been paid for their release. Initially, the condition of the three men was described as good, but later the Foreign Ministry said in a statement that their condition was “stable and satisfactory.” The three are employees of the Latvian helicopter company GM Helicopters, which is currently operating in Sudan as part of the United Nations’ World Food Program.

The Saeima Social and Labor Affairs Committee decided on Dec. 10 to draw up proposals for the indexing of small pensions next year, reports LETA. According to the Welfare Ministry’s data, 32 percent of pensioners in Latvia have monthly pensions of 135 lats (192.80 euros) or less (excluding supplemental benefits). Indexing such pensions next October would require allocation of an extra 400,000 lats from the 2011 state budget. Another proposal that the committee will be looking at is to reduce supplemental benefits for pensioners who receive large pensions. This could affect pensioners whose monthly pensions are 450 lats or more - which make up 1.3 percent of all pensioners in Latvia - as well as pensioners with pensions of 1,000 lats and more, who could have supplemental benefits cut altogether.

More than 100 businessmen will accompany President Valdis Zatlers on his visit to Russia next week, which is the largest business delegation ever to accompany the president on a foreign visit, Latvian Investment and Development Agency spokeswoman Vineta Vilistere-Lace told LETA. Although the composition of the delegation has not been finalized yet, the total number of delegation members should exceed a hundred, said Vilistere-Lace. It is already clear that this will be the largest-ever business delegation to accompany the president on a state visit, she said. Applications from the businessmen were accepted until last Friday; the list is now being finalized, said Vilistere-Lace. Zatlers will be visiting Russia from Dec. 19 to Dec. 22. Three priorities have been set for Zatlers’ visit - political dialogue with the Russian government, development of economic relations and strengthening the basis of Latvia-Russia agreements.


Latvia won’t amend budget before final vote

Latvia won’t confer with international lenders before final passage of its 2011 budget, which includes tax increases and spending cuts equal to about 280 million lati ($524.7 million), Prime Minister Valdis Dombrovskis said. “We will speak about the additional necessary measures with the lenders in January,” Dombrovskis said on Latvian Independent Television’s 900 Seconds. The budget will get final approval by parliament on Dec. 20, he said.

Latvia turned to a group led by the European Commission and the International Monetary Fund for a 7.5 billion-euro ($10 billion) loan in 2008 after its second-biggest bank collapsed. The Baltic country has raised taxes and reduced expenditures equal to about 14 percent of gross domestic product since the program started, according to central bank estimates.  Dombrovskis said today the government hasn’t reached agreement with lenders for reducing the payments into the country’s second-pillar pension system by 2 percent.

The sum that needs to be agreed with the lenders amounts to “tens of millions of lati,” he said, and may be adopted in the first half of next year. The budget consolidation figure referred to “high-quality measures” that have to be sustainable, said Gabriele Giudice, the European Commission’s mission chief to Latvia, in an interview with the magazine Ir, published on Nov. 24. In the interview, Giudice said the budget could be amended before adoption by Parliament.


Latvia may return to Eurobond market next year

Latvia may return to the international bond market in the second half of next year, when the government expects another credit-rating upgrade, Finance Minister Andris Vilks said. Receiving a higher debt grade in the first half of 2011 would “mean that probably we will move for a Eurobond issue for the second half of the year,” Vilks said in an interview in Riga yesterday. “We will go only when we feel it’s the right time, when the rates are okay.”

Latvia’s economy, which shrank by about a quarter since 2008 in the world’s deepest recession, returned to growth in the third quarter as export demand boosted industrial production. The improved finances of the bailout-loan recipient prompted Standard & Poor’s to raise the country’s debt rating one level to BB+, one step below investment grade this month.

The country, recommended for investment with a Baa3 rating at Moody’s Investors Service, needs to climb one more step at either S&P or Fitch Ratings to make its debt eligible for more investment funds. Fitch also rates Latvia at BB+, its highest junk grade.  “If the government is able to meet its fiscal targets and the economy shows further signs of a sustained recovery, the rating will come under upward pressure over the medium term,” said Douglas Renwick, a London-based analyst at Fitch, in an e- mailed reply to questions from Bloomberg. “However, the size of the fiscal adjustment is still considerable and this poses risks to meeting the 2014 euro target.”

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