Latvia Agrees to Lower Minimum Benefits, Ignoring IMF Warning

Latvia agreed to cut government payments to people without income and unemployment benefits, ignoring warnings from the International Monetary Fund that the move may threaten economic growth.

Prime Minister Valdis Dombrovskis and Andris Jaunsleinis, chairman of the Union of Municipalities, signed an agreement today in the capital, Riga, to lower the guaranteed minimum income for the country’s poorest from 45 lati ($83) a month to 35 lati starting next year, according to the Cabinet’s website.

Latvian unemployment, which stood at 16.1 percent in June after peaking at 20.5 percent in 2010 as a recession erased more than a fifth of economic output, is only worse in Greece and Spain within the European Union, according to Eurostat. The government should wait for a study on long-term unemployment before cutting benefits as the move “could worsen inequality and undermine growth,” the IMF said in a July 16 statement.

To contact the reporter on this story: Aaron Eglitis in Riga at

To contact the editor responsible for this story: Balazs Penz at

Press spacebar to pause and continue. Press esc to stop.

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.