RIGA, Dec 12 (Reuters) - Latvia's parliament backed an austerity package on Friday after a marathon session of 20 hours as the country eyes billions of euros of help from the International Monetary Fund and the European Union.
Amendments to the 2009 budget foreseeing a deficit of 4.9 percent of GDP, a rise in value added tax rates and excise duties and a cut in income taxes, all passed before the session that started on Thursday morning ended on early Friday.
"This kind of cut (in the budget) is practically impossible to pass anywhere else in such a short time," Prime Minister Ivars Godmanis was quoted by Baltic news agency BNS as telling reporters after the parliament meeting.
The government has given no figure for how much Latvia wants to borrow from the IMF and the European Union, but has said it needs to cover the budget deficit, have a reserve fund to back up the ailing banking system and to stimulate credit for businesses.
The amount of aid is expected to be several billion euros. Sweden and other Nordic states are also expected to contribute.
The government austerity package aims to cut spending, including a 15 percent drop in public sector salaries, and raise value added tax to 21 percent from 18 percent. The discounted rate of VAT will rise to 10 percent from 5 percent.
Excise duties on petrol, alcohol, tobacco and coffee will also rise. Newspapers will have the lower rate of VAT for a year, a relief to publishers, who had expressed anger over a previous plan for the rate for newspapers to hit the top level. (Reporting by Jorgen Johansson; Writing by Patrick Lannin; Editing by Jan Dahinten)