Dear people of Latvia,
Let me address you in these last minutes of the year 2008.
The economy, similarly as nature, has cycles. The floods are followed by ebbs, the bloom – by stillness. After the spending period there comes a period for accumulating the strength.
The nature has established that December is the darkest period of a year. However, it is a man that fills this period with light, heartiness, compassion and anticipation of spring’s arrival. It is people's ability to turn the darkness into the brightness, the hardness and difficulty into lightness. Even if the coldest months of the year are only yet to come.
the darker it is outside, the brighter fire should be lit in the kiln. Therefore I approach you today with an encouragement and confidence that we will successfully pass this coldest winter in the global and Latvian economy. Today you expect my answers to four essential questions.
First: Where are we?
Second: Where do we go?
Third: How do we get there?
Fourth: What awaits us in the new year of 2009?
Any prime minister should be ready to answer them. And I am ready.
First. Yes. We are in the end of the credit euphoria and in the beginning of the financial crisis. It is a painful combination. A year ago I projected that 2008 will be a difficult year. Difficult – due to a rather optimistic loans and lack of understanding about differences between money that has been earned and that has been loaned.
The forecasts have proven true. Unfortunately, they have been simultaneously accompanied by the global financial crisis. It has arrived in the United States, Europe, Russia, Asia, everywhere, and nobody really expected it… Neither did we, the Government of Latvia, foresee it. We were getting prepared for the worst… But hoped for the best. Now, the crisis has come and also my counterparts ¬– prime ministers of other European countries ¬– have been compelled to admit that.
Even though the rating agencies made faulty forecasts, Latvia’s main values are stable.
During the National Song and Dance Festival we showed to ourselves and to the rest of the world the best example of harmony and unity. Several thousands of people sang and danced as one union, proving wrong all the reproach of the aloofness and lack of cooperation among Latvians.
During the events of the 90th anniversary of Latvia, all Latvia shared a common festive atmosphere, pleasantly surprising with their brilliance and public involvement.
This was a year marked by referenda that proved of the rapid increase in public involvement of the Latvian society and keenly stressed our problems.
In the very end of this year, after 15 year long delay, the administrative-territorial reform of Latvia was eventually adopted. The Government will work at its best in order to provide that actual implementation of this reform ensures a stable and permanent growth of the service level.
Yes. Today we find ourselves in the middle of the global recession. The toughest period is yet to come and not solely in Latvia. In spite of all that, today, on the New Year's Eve, I want to express my personal conviction.
“Crisis” is another word for a “chance”. Crisis shakes us. Crisis brings us together. Crisis motivates. It separates minor things from really essential ones. It shows the real life. Crisis is a measure for our efficiency. It denotes the awareness of our values, encourages us to be better, efficient and prudent, and eventually – to be more sympathetic.
In the framework of this year's charity event "Angels over Latvia", the expected amount of donations was exceeded nine times. It is not a merit of the Government. Nevertheless, I would sincerely thank from behalf of me and the Latvian State all of you who found an opportunity to help your closest people.
You know, when the snow storm takes place in the Antarctica, the penguins get through it by huddling together in one large circle. If anyone of them goes astray, they bring it back.
In next two years Latvia will experience such a snow storm, and human values like confidence, giving a helping hand, compassion and kind-heartedness will be more important than ever. They would show our commitment and will. And you can be sure – the Government will be with you. I hope that you will also be with us for unity is our strongest argument against any crisis.
Where are we heading?
We should join the developed countries of Europe. And we will reach this goal.
What will be the price?
The price will be the balancing of our dreams with our capacities and awareness of how much, what and when we can afford for the money we have earned and not borrowed.
Any crisis is less characterised by its apparent features but rather by a future plan to overcome the crisis situation. Where will we be after the crisis? What will our life be like?
And in the end – do we have a plan?
Yes. We have a plan. It is a balanced sound plan for next three years. It might be unpleasant but it is a realistic one.
Due to a sharp slow-down of the economy and a banking crisis we were forced to borrow money from the International Monetary Fund and the European Commission. The International Monetary Fund asked us – what are those things you will not give up when asking for our assistance?
And we indicated them as follows:
– stability of the Latvian currency up to the joining of the euro zone;
– increasing pensions;
– maintaining salaries of medical practitioners at the previous level;
– maintaining salaries of teachers;
– increasing benefits to the disabled persons;
– free-of charge lunch for school students of Year 1 and Year 2;
– child care benefits;
And we received an answer: „Al right, but you will have to pay for that”:
- by significant cuts in public administration (which we have already started and will continue in the New Year beginning with the Government itself up to the state agencies);
- by radical reforms in education in order to implement the principle „money follows the student”;
- by reforms in health care – along with the establishment of a uniform first aid service we will also provide assistance to hospitals being able to provide complex health care services and by gradually transforming small hospitals into social assistance centres which are very necessary;
- by general decreasing of remuneration (-15%) in state and local government institutions.
These are tough measures but they are necessary and unavoidable.
This is the only way for us to implement Latvia’s Economic Stabilisation and Growth Revival Programme together with the IMF and the EC and to balance our incomes and expenditure in three years’ time.
When just a year ago I warned you of a difficult year to come I also promised you: whatever happens, three groups will remain untouched: pensioners, the disabled and children.
By increasing the pensions we have overcome the peak of inflation in June. Despite the considerable increase in electricity and heat prices no one is now sitting in the dark or in cold homes. Last year we increased benefits to the disabled children and to those who are disabled since their birth. Child care benefits were also considerably increased. We will continue to support the most vulnerable groups of the society. For any price. But the rest of us will have to earn our salaries. In order to spend what we have earned and not borrowed.
Here in Latvia we still have reserves and motivation for growth. But for this purpose our will and work capacity are important. We have made a long way since the times when we roasted ourselves in front of the so-called Godmanis kiln.
Today we are a full-fledged member of the European community and by receiving assistance from stronger partners we will continue our development by supporting business and overcoming the crisis.
It was my destiny to be a Prime Minister of Latvia during the most difficult period in early 1990s and now when Latvia again faces a difficult time.
Therefore I would like to approach all of you who feel frustrated and upset during this crisis and I would like to quote Rainis:
"It is the great word „but”,
So you remember it
When all the other men seem to you
Upset and depressed."
But. But we will get over this crisis all together and shoulder to shoulder.
Happy New Year!
God bless Latvia!