Dombrovskis Coalition Wins Majority in Latvia Election
Post by (mbt schuhe gnstig) Oct 2010
Post by (mbt schuhe gnstig) Oct 2010
Oct. 3 (Bloomberg) -- Latvia's ruling coalition may form the next government after the three parties won a majority in the Baltic nation's first parliamentary election since it suffered the world's deepest recession.
The parties backing Prime Minister Valdis Dombrovskis won 57.6 percent of the vote with 96 percent of precincts reporting. The premier's Unity party has 30.6 percent to 25.8 percent for the opposition Harmony Center. Unity may get 34 seats in the 100-member legislature, according to estimates from Latvian TV, the second-biggest total for any party since 1993.
The voting was a "positive surprise," Dombrovskis, 39, said in televised remarks after the preliminary results were released. Preliminary results show the government will "gain a convincing majority, which to my mind is reason for the current government to continue to work," he said.
Unity topped the vote even after Dombrovskis raised taxes and cut spending, including wages for public employees, to meet the terms of a 7.5 billion-euro ($10.3 billion) bailout led by the International Monetary Fund and European Union. The next premier will have to reduce the budget deficit by almost two- thirds by 2012 to comply with EU rules.
Latvia's economy shrank a cumulative 25 percent in 2008 and 2009 as a property boom turned to bust and the country's second- largest bank failed.
Dombrovskis, a former finance minister and central bank economist, was named prime minister on Feb. 26, 2009, two weeks after his predecessor's four-party Cabinet collapsed. Upon taking power, he warned that Latvia was "on the verge of bankruptcy." His government approved a supplementary budget that ensured the continued flow of funds from the IMF and EU.
Can't Ignore Harmony'
Based on the preliminary results, the current government would have 63 seats in the 100-seat parliament, according to estimates by Latvian Television. Among opposition parties, Harmony would gain 29 seats and For a Good Latvia would have 9.
Representatives of the governing parties will meet today, Dombrovskis said.
Some members of the ruling coalition have suggested cooperating with Harmony, which represents the Russian speaking minority, a group that hasn't been part of the government since Latvia declared independence from the Soviet Union in 1991.
"We can't ignore Harmony Center and leave them out," said Solvita Aboltina, a Unity member of parliament, according to the newswire Leta. "We have to think of ways of how to democratize parliament and involve the opposition in its work."
Adding Harmony to the coalition would help shield the government from anger over further budget cuts, said Aigars Freimanis, director of pollster Latvijas Fakti, before the vote.
More Cuts Needed
The next government will face a budget deficit of about 8.5 percent of gross domestic product this year, with plans in place to cut the shortfall to 6 percent in the 2011 budget.
The next government will have "hard work" ahead with next year's budget, Dombrovskis said.
The two smaller coalition parties, Greens & Farmers and For Fatherland, received 19.5 percent and 7.5 percent, respectively. The opposition For a Good Latvia had about 7.6 percent. Turnout was 63 percent.
For a Good Latvia, which is made up of the People's Party and Latvia's First Party, led the four-party coalition that government Latvia during the boom period, and took the blame for the crisis. The party won 33 seats in the 2006 election.
The decline in Latvia's economy during the past two years was the deepest in the world, according to an IMF working paper published Sept. 1. The country has implemented austerity measures equal to 14 percent of GDP since the bailout program began in late 2008, according to the Latvian central bank.
Unprecedented' Austerity
The spending cuts and tax increases implemented by Dombrovskis's government were the biggest among the three Baltic states, where were "unprecedented by historical and international standards," the IMF said.
Latvian unemployment increased to 20.4 percent in the first quarter, from 5.3 percent in the fourth quarter of 2007, according to a labor force survey. The figure fell to 19.4 percent in the second quarter.
The economy saw its first quarterly growth in the first and second quarters, expanding 0.3 percent and 0.8 percent, and is expected to contract around 1.5 percent for the year, according to Swedbank AB, the biggest bank in the Baltic states.
Latvia's credit default swaps, which investors use to protect against default or speculate on a borrower's credit worthiness, surged to 1,193 basis points in March 2009. They fell to 328.5 basis points on Oct. 1, below the costs for Greece, Ireland, Portugal, and Romania. Wenn Sie an
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