"The state, in principle, is bankrupt...we are all living on debt. Education has been crushed between the millstones and teachers will be the first to feel it," said Mareks Gruskevics, state secretary of Latvia's Ministry of Education and Science speaking to educators in the western Latvian port city of Liepāja.
Wrong, retorted the Finance Ministry, saying that there was LVL 466 million in the state treasury as of July 16, with some EUR 1.2 billion expected to be paid in by the end of the month.
Gruskevics said that radical educational reforms were necessary, and would have to be executed in a couple of weeks, rather than over the years as had been the case in neighboring Lithuania and Estonia.
Media reports said that Gruskevics, apparently associated with the People's Party (TP), pointed out that TP founder Andris Šķēlē, a controversial businessman and reputed Latvian oligarch, had spoken of the necessity for educational reform ten years ago.
This could indicate that Gruskevics' harsh statement reveals an underlying conflict within the ruling coalition -- the Finance Ministry is run by Einārs Repše of New Era (JL). The TP is enormously unpopular and blamed for exacerbating the economic crisis under former Prime Minister Aigars Kalvitis and his "these are the fat years" attitude toward a debt driven, overheated economy.
At the same the daily Diena quoted Latvian surgeons as saying the suspension of elective cardiovascular surgery would annually condemn at least two thousand persons in Latvia to premature death or incapacitation requiring care. Latvia has made budget cuts and proposed the restructuring of hospitals that are widely seen as a de facto abolition of tax-paid health care as well as emergency care in several parts of Latvia, leaving citizens to fend for themselves. While many employers offer some form of private health insurance, there has been no official plan for a transition to private medicine and no cuts in taxes to make such private insurance more affordable. Leading Latvian businesspeople, meeting with government officials, have harsh criticized the possibility of further VAT and other tax increases as part of a deal under negotiation with the International Monetary Fund (IMF). The IMF, which has not yet approved its smaller loan (the EUR 1.2 billion is coming from the European Commission) to Latvia, is apparently demanding harsher conditions, including tax increases, than the EC.