Uitspraak Constitutioneel hof Letland bemoeilijkt mogelijke staatssteun EU-IMF (en)
Latvia's constitutional court has ruled against government pension cuts, drawing a question mark over the country's ability to meet the terms of an international lending programme.
"The decision to cut pensions violated the individual's right to social security and the principle of the rule of law," the court said in its judgement, which cannot be appealed, on Monday (21 December).
The pension cuts - in place since July - formed a vital part of the Latvian government's list of austerity measures, as it struggles to bring down its ballooning budget deficit and comply with terms under an EU and IMF-led bailout.
The court ruled that the cuts - weighing in at between 10 and 70 percent of a pension depending on an individual's status - were illegal and parliament must have measures in place to rescind them by March 2010.
Added to this, the government must pay back the cut money - estimated to be in the region of €250 million - no later than 2015. Roughly 9,000 pensioners had lodged complaints with the constitutional court.
In handing down its ruling, the court said agreements signed with international lenders "in and of themselves cannot serve as an argument about the limiting of basic rights."
It added that lawmakers who approved the rushed-through cuts had "not evaluated carefully the alternatives."
Tough times
The fractious coalition government of the small Baltic state of 2.2 million people is currently battling with an extremely tough economic situation after a decade-long boom imploded in 2008.
Monday's court decision is a further challenge for centre-right Prime Minister Valdis Dombrovskis i, with unemployment already exceeding 20 percent and the economy set to shrink by 18 percent this year.
Austerity measures provoked civil unrest earlier this year, with more structural and fiscal reforms demanded under the terms of the EU and IMF-designed €7.5 billion aid package, which is being paid out in installments.
Cutbacks will now have to come from other sectors, said the government, with spending in most areas already pared to the bone.
'As Latvia is committed next year to meeting a certain level of public deficit ...in order to meet targets there would need to be spending cuts in other areas,' the finance ministry said in a statement.
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