Latvia’s parliament has accepted a package of 2009 budget reforms that slash state spending and raise taxes—and which prepare the country for billions of lats in loans from the International Monetary Fund and the European Union.

The Saeima on Dec. 12 voted 57-21, with 17 abstentions, to accept the changes proposed by the government of Prime Minister Ivars Godmanis.

Latvia has been hit hard by the global economic downturn. In early November the government took over Parex Bank, one of the country’s largest financial insitutions. Financial services companies have lowered their investment outlook for the country. And the IMF forecasts the nation’s gross domestic product next year will decrease by 2.2 percent.

The parliament’s debate on the budget reforms began Dec. 11 and lasted into the following morning. The session followed a Dec. 10 special meeting of the Cabinet of Ministers devoted to hammering out the package of legislation, which came after consultations with experts from the IMF, the EU, the Bank of Latvia and others. Among assumptions used by the government in determining the revised budget is that Latvia’s official unemployment rate will rise to 10 percent next year, the news agency LETA reported.

Under the revisions, Latvia’s state budget next year forecasts revenue of LVL 4.406 billion, but spending will total LVL 5.146 billion—a deficit of LVL 746 million.

Among changes in the budget is a 3 percentage point increase in the value added tax (in Latvian, pievienotās vērtības nodoklis or PVN), to 21 percent from the current 18 percent. The reduced VAT of 5 percent, applied to certain products and services, will increase to 10 percent. In addition, the Saeima trimmed the range of products and services that are free of VAT.

The new budget cuts LVL 419.6 million from the previously approved 2009 budget. Ministries and other areas of government spending will see cuts across the board. The Ministry of Health, for example, will lose LVL 44.6 million; the Ministry of Defense, LVL 43.7 million; the Ministry of Education and Science, LVL 43.2 million; and the Ministry of Transport, LVL 37.4 million. Government employees who do not lose their jobs are likely to see salary cuts of 15 percent.

Latvia’s public broadcasters, Latvijas Radio and Latvijas Televīzija, are to lose LVL 3.7 million or about 25 percent of their state support. Latvijas Radio is crying foul, warning that the reduction will mean shuttering most of the broadcaster’s five channels, slashing air time and pulling back on its signal.

Latvian officials were scheduled to continue negotiations Dec. 12 with the IMF and EU on a loan package of EUR 5 billion or more. The Swedish government also has offered assistance.

Work on a new museum documenting the life of Latvians in the diaspora is well underway. Formed in September 2007, the association Latvians Abroad – Museum and Research Centre (Latvieši pasaulē – muzejs un petniecibas centrs) has now hired an office manager and has launched a Web site.

Under the leadership of Maija Hinkle, the association was founded by a group of Latvians in the U.S., Canada and Latvia. The group is pursuing several projects, including finding a location for a permanent museum, according to a Dec. 10 press release and the Web site.

The Web site, www.diasporamuseum.lv, informs visitors about the mission of the museum and research centre, which is the preservation and interpretation of diaspora Latvian history over the past 200 years. The envisaged programs and activities aim to build bridges between Latvians living in Latvia and diaspora Latvians, and between Latvia and the various other countries in which Latvians reside.

Marianna Auliciema, a Latvian from Canada and Australia who now lives in Rīga, has been hired as the association’s office manager. She also is a member of the association’s board of directors. (Latvians Online Editor Andris Straumanis, an assistant professor of journalism at the University of Wisconsin-River Falls, is a consultant to the museum and research centre.)

One of the projects being developed is a travelling exhibition that will display a suitcase owned by Albins Simsons. The approximately 100-year-old suitcase has “seen” both the East and West. It was brought to Latvia in 1921 by 22-year-old Simsons, who was returning to his home in Bauska, having lived in Ukraine as a refugee after World War I. Twenty-four years later the suitcase continued its journey, this time to the West, when the Simsons family fled to Germany in 1945 and later moved to the United States in 1951.

The second focus of the exhibition will be a weaving loom, made out of scrap wood in Germany, taken to Australia by a Latvian weaver and donated to Museum Victoria as part of a display in the Melbourne Immigration Museum.

A further exhibition, planned to be completed over a period of three years, will be a DVD of the previous exhibition materials titled “Latvian Tracks Over the World: A Suitcase Exhibition on DVD.”

The association is actively seeking a location for a permanent museum. Various potential locations have been assessed, but a decision regarding the location is still to be made. In the meantime the association is keen to accept documents, photographs, material culture, video and audio recordings and other archival material that could be donated to the collection. The association is also glad to accept new members and supporters as well as other forms of assistance, including the founding of support groups abroad. For more information, contact Auliciema via e-mail at lapainfo@gmail.com.