Wednesday, on April 13, Prime Minister Valdis Dombrovskis held a meeting with the representatives of the Fourth Review Mission of the International Loan Program’s Partners (the International Monetary Fund (IMF), the European Commission (EC), the World Bank etc.). After the meeting, the sitting of the Cooperation Council was held, which was attended by representatives of the coalition partners - the Greens and Farmers’ Union (ZZS).
After the sitting, Prime Minister V. Dombrovskis and Chairman of the Saeima faction of the ZZS Augusts Brigmanis informed the media on the progress of negotiations.
For complete record of the briefing please visit: http://filesocial.com/1r28thc
Prime Minister Valdis Dombrovskis: “The negotiations with international creditors have progressed in a positive atmosphere and we have reached a set of significant agreements. The reason why these negotiations dragged on is the necessity to reach this agreement. We discussed this issue also in the Cooperation Council and the most important issues are:
The agreement has been reached on the amendments to the 2011 budget. If these amendments are adopted by the Saeima at the second reading, then there won’t be any problems.
As regards the 2012 budget, the agreement has been reached on the provisional amount of consolidation – LVL 150-180 million.
The work is continuing on outlining the measures. However, it is clear that these measures are outlined as the main directions and we will provide more detailed comments tomorrow after the negotiations. Likewise, the mission-level agreement has been reached on partial exemption of the banking sector’s reserve shares, where the precondition is the submission of the plan for sale of the Citadele banka. This plan has already been prepared and there won’t be any problems. Also the Financial and Economic Committee will have an opportunity to address this issue. Respectively, the Commission will be able to adopt a decision on the exemption of reserves.
We didn’t discuss detailed measures of consolidation. The discussion dragged on, because the agreements had been reached, but they should be formulated in a document. We can’t manage it now and that is the reason why the extraordinary sitting of the government has been postponed. It will be held tomorrow, April 14th at 17.00 after the next round of negotiations, but as I already mentioned, the most significant agreements have been reached. Nothing will be changed to the amendments of the 2011 budget.
What amount of the operator’s stability reserve could be exempted? We will be able to give exact amount tomorrow, but it is obvious that it will be a partial exemption, exemption of a considerable share. As regards the consolidation amount of LVL 150-180 million, I would like to mention again that it is a provisional amount that could change as the result of changes in the economic situation in the country. If we look back at the previous negotiations with the Mission, we can see that the consolidation amount has decreased. If the economy continues to develop successfully, there is still an opportunity to adjust the consolidation amount. The objective for the budget deficit remains unchanged – below 3% of GDP. It is the criteria according which the implementation of the program will be assessed. The above-mentioned consolidation amount could result in lower budget deficit - up to 2.5% of GDP.
If we strive to meet the Maastricht criteria we have to attain lower level, but the objective of the program remains the same - below 3% of GDP.
By the exemption of the stabilization reserve of the financial sector, we can shift these resources for common objectives – covering the budget deficit.
Information prepared by:
Acting Press Secretary to the Cabinet of Ministers
Phone: +37167082919 / +37129120742