Oct. 11 (Bloomberg) -- Prime Minister Valdis Dombrovskis is set to return as the head of Latvia’s government after three parties that back austerity measures and adopting the euro reached a coalition agreement yesterday.
The three-party alliance that will have 56 seats in the 100-member legislature will ask President Andris Berzins to name Dombrovskis for another term. The coalition will contain former Latvian President Valdis Zatlers’s Reform Party and the National Alliance, a nationalist Latvian party, shutting out Harmony Center, which won the most seats in the Sept. 17 election and appeals to the country’s Russian minority.
Dombrovskis, 40, took the position in March 2009, when the country was at odds with the European Commission and the International Monetary Fund over budget cuts. The country, which sought a 7.5 billion-euro ($10.3 billion) loan in 2008 after rescuing its second-biggest bank, now has an expanding economy, access to international capital markets and plans to close its lending program with the European Union and the International Monetary Fund this year.
“This was the logical outcome of the coalition talks,” said Daunis Auers, a political scientist at the University of Latvia, by phone. “There never was a majority to bring in the Russian speakers into government.”
Zatlers’s party’s plans to form a coalition government with Harmony and Unity failed when Unity refused to join that coalition. Berzins will nominate a prime minister after the term of this parliament expires on Oct. 17, he said in a statement yesterday.
“The best coalition would be a broad coalition to consolidate next year’s budget,” said Zatlers said on Latvian Independent Television today, referring to a government with Harmony. The current coalition wont have the 67 seats needed to alter the country’s Constitution, which had been part of Zatlers’s platform.
Latvia held a snap ballot on Sept. 17 about a year after the last parliamentary elections, after then-President Zatlers called a referendum following the parliament’s failure to lift the immunity of a lawmaker facing a criminal probe. The next elections will be held in three years time, instead of the usual four years, due to the snap elections.
The Baltic country has cut spending and raised taxes equal to about 16 percent of gross domestic product. It plans further cuts in next year’s budget to lower the deficit to 2.5 percent so it can adopt the euro in 2014.
--Editors: Balazs Penz, James M. Gomez
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