Prime Minister Valdis Dombrovskis has apologized to the Latvian people for the serious tests they will have to endure as the country struggles to emerge from its economic crisis and avoid bankruptcy.

At the same time, the prime minister said in a statement released June 18, conflict will not solve the problem. The announcement came as several hundred people gathered in the Esplanade in downtown Rīga for a demonstration organized by the Free Trade Union Confederation of Latvia (Latvijas Brīvo arodbiedrības savienība, or LBAS) to protest the effects on workers of deep cuts to the national budget.

“Even though during the so-called ‘fat years’ I have not worked in the government coalition,” Dombrovskis said in his statement, “at this moment I wish to apologize to the people of Latvia for the situation and for the tests that we all will have to endure.

“I recognize that I cannot promise well-being tomorrow at lunchtime,” he continued, “but I know I am doing all that is possible to stop Latvia’s heavy fall.”

The Saeima on June 16 approved LVL 500 million in cuts to this year’s budget, which government leaders hope will clear the way for a package of international loans to be released to the country. Without the money, Dombrovskis said in his statement, the government by August will not be able to make salary, pension and other payments.

The sweeping cuts to the national budget have claimed their first political casualty. Health Minister Ivars Eglītis stepped down June 17 to protest what a 10 percent decrease in his ministry’s budget will mean to health care in Latvia.

“This is a decisive time for our nation, and we do not have many options,” the prime minister said in his statement. “Latvia faces bankruptcy, from which we can save ourselves only by sharply reducing state expenditures and hoping for the international loan.”

The other option would be to slash the budget even further, thereby putting even more pressure on society, Dombrovskis said.

Latvia’s national budget now foresees spending LVL 4.6 billion this year. The budget will have to be cut by another LVL 500 million in 2010 and again in 2011, officials have said.

The trade unions understand the need for cuts to state spending, LBAS Chairman Pēteris Krīgers said in a press release announcing the June 18 demonstration.

“But we know that there are different ways to save, with an eye toward development or without it,” Krīgers said. “Even while saving it is possible to make new jobs and create new opportunities. Latvians have always survived thanks to their capacity to work. That is why we should be given the opportunity to work!”

In a speech before the Saeima, President Valdis Zatlers admitted the country’s leaders have not been prepared to deal with the crisis.

“In my opinion,” the president said, according to a transcript of his speech, “we must all not only acknowledge, but also accept responsibility for the fact that our decisions often have been incorrect, actions have been incorrect, we have lacked political will, lacked economic and management far-sightedness, we have badly run our country.”

He urged members of parliament to work even through the summer to address the next phase of budget cuts and to involve the public in the decision-making process.