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Latvian report Latvian report
by Euro Reporter
2012-08-23 10:14:46
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Prime Minister Valdis Dombrovskis (Unity) is open to hearing out various ideas on Latvia’s economic development, improving cooperation with businessmen and the nation's welfare, including those from Einars Repse's "For Latvia's Development". Dombrovskis said in an interview with the LNT morning show "900 sekundes" today that he disagrees with Edgars Jaunups' (Unity) statements that the government has left neglected cooperation with businessmen. "We are working a lot with the Latvian Employers' Confederation and similar organizations, therefore I cannot agree with Jaunups' statements," said the prime minister.

Commenting the potential establishment of a new political party, if government does not hear out "For Latvia's Development" proposals, Dombrovskis pointed out that they are speculation. "Jaunups is aware that a new party is currently not necessary."

"Talk about the founding of a new party has been continuing for several months. Repse's association should decide whether it intends to establish a party or not," said Dombrovskis. As reported, Jaunups told "900 sekundes" yesterday that, if the ruling coalition does not take into account and prioritize "For Latvia's Development" proposals for the country's economic development, the possibility of a new party is not excluded.


Enough signatures for referendum on Latvian citizenship

The movement "For Human Rights" has collected the required 10,000 notarially-verified signatures in support of granting Latvian citizenship to all local non-citizens, predominantly Russian speakers, the movement's coordinator Andrei Tolmachev told reporters here on Wednesday, according to Itar-Tass.

According to the organizers' plans, the first stage of the action, the collection of 10,000 notarially-verified signatures, was to have continued till August 29. Then the signatures will be referred to the Central Election Commission. According to Latvian law, the Central Election Commission must check the collected signature for authenticity and ascertain the absence of errors. Then the second stage of the campaign will be held - the collection of signatures of ten percent of citizens (some 153,000 people) in support of the initiative. If this number of signatures is collected, the Central Election Commission will be able to hold the referendum on amending the law On Citizenship. If the outcome of the nation-wide referendum is positive, Latvian citizenship must be granted to all non-citizens. The votes of half the number of participants in the latest parliamentary election (some 459,000 people) are needed for the referendum to be valid.

Latvia has a population of over 2 million, including some 320,000 predominantly Russian speakers having no Latvian citizenship. From the time of Latvia's secession from the USSR in 1991 they were stripped of most political rights, including the right to vote in the municipal and parliamentary elections and in the election to the European Parliament. Aside from political rights non-citizens are deprived of a number of social and economic rights. There are altogether 79 distinctions in the rights of citizens and non-citizens, including 47 restrictions on professions. Latvian parliament more than once rejected attempts of the Russian speaking opposition to change this situation.


Latvian government cuts VAT to keep inflation in check

Despite the troubles in the Eurozone, Latvia remains dedicated to its goal of introducing the euro in 2014. In order to help Latvia meet the Maastricht criteria, the government cut VAT from 22% to 21% on 1 July, hoping that this would help keep the inflation down. Now the Latvian statistics office Centrala statistikas parvalde has revealed the inflation figures for July, showing that the cut indeed has had some effect: the retail prices are down 0.5% m-o-m; previously, the drop was in the neighbourhood of 0.1-0.2%. The y-o-y results are down to 1.7% from 1.9%.

Still, even the government has mixed opinions on how well the cut has worked. The Latvian Ministry of Finance believes that the cut has indeed worked, pointing out that
m-o-m inflation in Lithuania and Estonia stood at 0% and 0.2%, respectively.  The ministry estimates that the cut could theoretically lower the inflation by up to 0.7%, but the realistically attainable figure is about 0.3-0.4%. It also notes that the VAT cut may keep price growth lower even for the next months. As to the ultimate goal – meeting Maastricht criteria – the ministry believes that the inflation will continue to fall and Latvia will reach the criterion in spring 2013.

All the optimism notwithstanding, much of the drop can be explained with the usual seasonal changes. Vegetables showed a 7.3% price drop, due to the new harvest hitting the market. End-of-season sales helped drag down clothing prices by 5.9% and footwear prices by 6.3%. In comparison, PM Valdis Dombrovskis also agrees that the cut has worked as an anti-inflation measure, but it has not brought prices down as fully as possible. The government had signed a co-operation memorandum with Latvian retailers, pledging to cut the prices accordingly, but Dombrovskis admits that not all retailers have fully followed it.

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