Internal Devaluation To Fuel Social Upheaval

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In a bid to secure a EUR1.2bn tranche from the EU and IMF's EUR7.5bn bailout by the end of June or early July, the Latvian government has proposed an array of spending cuts to tighten up its expansive fiscal policy. The government is planning on slashing LVL500mn from public expenditures for the 2010 budget, with proposals including a staggering 70% cut on pensions for pensioners still in work, a 10% reduction in the old age pension and the parental allowance, in additional to a painful 20% cut in wages of public sector workers.