RIGA (Reuters) - Prime Minister Valdis Dombrovskis agreed with coalition partners Sunday to work on forming a majority government after an election win which kept Latvia on the path of IMF-led austerity aimed at eventual euro zone entry.
Latvian media quoted the election commission as saying after the Saturday vote that Dombrovskis’s Unity bloc won 33 seats while his two coalition partners got a combined 30 seats.
This gave 63 seats in the 100-seat parliament for a government previously in a minority.
“We discussed the possibilities for further cooperation and we are ready to continue work,” Dombrovskis told reporters after meeting the Union of Greens and Farmers, which won 22 seats.
He said the aim should be to hold a parliament vote on government approval on November 2.
“We also agreed that Latvia’s economic stabilization program and agreement with lenders must be further implemented,” he added.
He later met the third coalition partner, the nationalist Everything For Latvia/For Fatherland and Freedom bloc, which won 8 seats, and also agreed to work further with them.
The vote was a triumph for Dombrovskis, who has already steered Latvia through harsh budget cuts and tax rises to meet the terms of a 7.5 billion euro ($10.24 billion) bailout agreed with the International Monetary Fund (IMF) and the EU.
More austerity awaits the nation of 2.2 million people to reduce the budget deficit on the path to euro entry, which under the IMF and EU deal is targeted for 2014.
Dombrovskis also said he would meet the opposition Russian minority party Harmony Center, which had been hoping to win the election but came in second place with 29 seats, to see if there was any way the government could cooperate with it.
Despite the budget cuts, Latvians have regarded Dombrovskis as an honest crisis manager of the mess left by other governments. The economy has also begun to show a slow recovery from the 18 percent economic drop of 2009, the worst in the European Union.
People have also accepted the budget measures, which have included public sector pay cuts of 50 percent, with forbearance.
The only public display of anger was a riot in Riga in January 2009, before Dombrovskis took power.
Harmony Center, which has Latvia’s large Russian minority as its traditional base of support, had been hoping to woo ethnic Latvians to vote for it after the crisis.
It had hoped this would propel it to first place in the election and a possible place in government for the first time since the 1991 fall of the Soviet Union.
The IMF and EU program aims to reduce the budget deficit, avoiding a devaluation and paving the way for euro adoption in 2014. Domestic critics have said the plan puts too much emphasis on austerity and not enough on economic stimulation.
Nordic states, whose banks such as Swedbank and SEB are heavily exposed to the Baltic region, also provided funds for the bailout.
Editing by Peter Graff