Supplementary Memorandum of Understanding of 13 July 2009; with IMF – in the Economic Stabilization and Growth Revival Programme for Latvia adopted by the Saeima on 16 June 2009. The Cabinet of Ministers took notice that IMF, based on the staff report of its mission reviewed by the Executive Board of the IMF, may refuse to grant the next installment of the loan if the commitments specified in the letters of intent were not fulfilled. During the negotiations for the Agreement of 11 June, other alternative pension reduction solutions were also discussed; however as a result of these discussions, the agreement was reached only with respect to one particular solution. Based on the above agreement and considering that it was supported not only by the political parties that constitute the government but also by a wide segment of society, the respective draft of the Disbursement Law was prepared. Since this draft law precisely reflects the agreement reached, it would not have been rational to discuss other solutions or to hold additional expert consultations during its preparation. The budget deficit had to be reduced immediately; otherwise the receipt of the international loan was endangered. The Cabinet of Ministers pointed out that reduction of pension does not apply to a group of persons that receive old-age pension and are self-employed at the same time. Taking into account the purpose of old-age pension as part of social security system – to protect persons so that they are not left without any income at old age, when they are unable to work and thus gain income from employment – the Cabinet of Ministers considers the reduction of pensions for employed pensioners as conformable with the principle of justice. This is the only solution that follows from the facts that there is the deepest crisis in the country and the Gross Domestic Product decline is the biggest in Europe. The Cabinet of Ministers also stated that reductions in other positions of budget started already in summer 2008, and all the resources available therein have already been exhausted by July 2009. The Cabinet of Ministers informed that the State administration system undergoes constant development and structural reforms have been started already before the economic indicators started to show downfall. For example, the total reduction of the budget expenditures for the remuneration at the State direct administration institutions compared to 2008 is LVL 296.7 million. 12