11 June, 2009

2nd Letter to the IMF about Latvia


Jens Henriksson, and
Jarle Bergo
International Monetary Fund
1900 Pennsylvania Ave NW
Washington DC, 20431

In addition to my previous letter highlighting the need for the IMF to reduce corruption in Latvia I would like to point out the following:
I have been informed that some of the IMF legal changes requested within Latvia have been nieve and have assisted debtors to avoid their contracted obligations. For example an IMF regulation that at least 50% of creditors must agree to new repayment terms simply enables debtors to take on new creditors and have an agreement with them that results in evasion of debt repayments to the true original creditors.

Then there are changes to the legal system in Latvia that the IMF could influence that would provide immediate benefit to Latvian families. For example currently in Latvia a debtor that defaults on one property will lose all properties. There is not the opportunity under Latvian law for a debtor to separate one property and continue to service the debts on remaining property. If the IMF influenced this simple change then there would be less loss to the economic base of Latvian society and therefore an increased ability for the Latvian state to repay IMF loans.
The Latvian government is adopting budget cuts that seem to be unfairly weighted against the common folk eg pension reductions. There are other taxes that could be adopted like takes on interest paid on deposits in banks. Furthermore, the government has passed laws that leave a window of opportunity for the wealthy to transfer their funds out of the country.

The Court system in Latvia does not seem to uphold the rule of law to the extent that it can be relied upon to encourage sustained business investment that otherwise Latvia could attract. There are businesses that are established in Latvia yet prefer to unwind their investments from Latvia because they can not rely on the rule of law. It is too common practice in Latvia that court rulings are given to the party that pays for it. Right from the heads of the Supreme Court down there is blatant unprofessional manipulation of the ruleof law that discourages investment in Latvia.

The IMF would be able to provide realistic assistance to the people of Latvia if it gained advice from the many parties interested in seeing Latvia become a more ethically economic viable country. The IMF provides an opportunity for the implimentation of long awaited laws that previous governments have not been motivated to pass. The IMF should be communicating more with the true representatives of the peopleof Latvia and not be fooled by those parties that are not performing their duties as their position would expect in the western world.

Dean Strautins
Director Australian Chamber of Commerce in Riga