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Sunday 17.12.2017 | Name days: Teiksma, Hilda
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BNN summary of the week: Latvia’s 2018 budget, Vaškevičs in Austria, and coalition talks in Germany

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Baltic news, News from Latvia, BNN.LV, BNN-NEWS.COM, BNN-NEWS.RUBNN offers a summary of this week’s topical news in a variety of categories: Fight; Business; Decline; Change; Growth; Future and Opinion.

CHANGE: Saeima approves next year’s budget; more funding for health and defence

On Thursday, 23 November, the Saeima approved Latvia’s budget for 2018. Next year’s budget revenue is planned at EUR 8.75 billion, whereas expenditures are planned at EUR 8.95 billion. The largest increase of funding is planned for healthcare. Latvia’s defence budget is set to reach 2% of GDP.

The budget was supported by 59 deputies. 37 members of the parliament voted against.

The Saeima started reviewing laws associated with the budget on Wednesday and continued reviewing them today. Politicians had previously agreed that budget talks would not continue late in the evening.

Forming the budget, politicians were committed to drop the so-called deputy quotas. They also agreed that no additional funding would be allocated for parliamentarians’ proposals. The Saeima stuck to this promise and supported only a couple of proposals on allocation of additional funding. Requests submitted for the budget suggested allocation of additional finances worth EUR 223 million. However, nearly all proposals were declined in the end.

Among deputies’ supported proposals is the allocation of EUR 2.4 million to boarding schools. Deputies also supported the proposal for allocation of EUR 302,250 from the budget for emergencies to higher education to match growth of social fees.

Full article here

FIGHT: Vaškevičs feels «harsh but fair» attitude from court justice system in Austria

Former deputy director of Latvia’s State Revenue Service Vladimirs Vaškevičs, who is accused of bribery and whose extradition from Austria has been a priority for Latvian authorities for some time now, says he feels «harsh but, thank God, fair» attitude from the Austrian court justice system.

In his interview to Neatkarīga, he was asked just how safe and stable he feels in Austria. The former official said «only dead men can feel calm and stable in this world, and even that is questionable».

Vaškevičs did not reveal his plans for the future. He only said that the most important thing is «what you have now. And right now I am undergoing medical treatment and studies.»

«Forgiving a murderer – it is the greatest human virtue. It is unimaginably hard. I don’t know if I can do that. Now they are in a better situation: they live, they have power, they drink and they are merry in their homeland. And it seems to me they are completely oblivious that conscience can and will definitely force a person to pay for what they have done. It is a law of life – it works without question and without mercy. I wish them to understand this law. But as for my good name, I have it and no one can take it away from me,» said Vaškevičs.

Full article here

DECLINE: Lengthy German coalition talks collapse

The German political parties that entered the country’s federal parliament after elections in September, still cannot reach an agreement on making a coalition and a majority government, but German Chancellor Angela Merkel has evaluated that new elections would be better than a minority government.

British public broadcaster BBC reports that on Sunday, November 20, the Free Democratic Party liberals left the coalition talks with Mrs Merkel’s Christian democratic bloc and the Greens.

Full article here

FUTURE: Talks commence on restoring ferry traffic between Ventspils and Saaremaa

On Wednesday, 22 November, a delegation from Saaremaa municipality arrived at Vetnspils Freeport to discuss with representatives of Ventspils municipality and freeport the proposal to restore ferry traffic between Saaremaa and Ventspils.

It should be added that even though ten years have passed since the closure of Ventspils – Mintu (Saaremaa), both Estonian and Latvian sides still remember this ferry line. In addition, representatives of both municipalities have received many questions from residents about the possibility of restoring this ferry line.

Ventspils Freeport says that the freeport’s authority with Ventspils City Council deputy chairman Jānis Vītoliņš, Ventspils Freeport CEO Imants Sarmulis and Marketing and Development Office manager Igors Udodovs met with Saaremaa municipality representative and Mintu port CEO Mihkel Undrest and Saaremaa municipality’s attracted researchers Aado Keskpaik and Juri Sakkeus. Guests explained Saaremaa municipality’s position, saying that restoration of the ferry line is very important.

Full article here

BUSINESS: lost Russian cargoes have cost Latvia nearly 50 million in nine months

Latvia’s economy has lost nearly EUR 50 million in nine months because of missed Russian transit cargoes. While Russian Railway had approved 90% of oil and coal cargoes for transit through Ventspils port at the beginning of the year, this amount had declined to a mere 5% by September, says Baltic Association – Transport and Logistics President Inga Antāne.

I should be said that BATL has spent the last couple of years asking Transport Ministry and the government to act in order to reduce risks for the economy and employment created by Russian government’s strategic decision to divert cargoes to its own ports. It should be added that transit is the second largest sector of Latvia’s national economy.

BATL President comments: «Day to day statistics are becoming more and more grim and only serves to emphasize the true changes in the transit sector. In the current situation the one to make quick and strategically sound decisions is the winner. The first piece of homework is improving Latvia’s competitiveness. This means dropping the plan to increase railway infrastructure fees next year, which would make Latvia a leader among EU member states in terms of size of railway fees.»

She continues: «If we cannot reach a compromise with Russia for preservation of transit volumes, we have to do all we can to make Latvia’s transit sector, including railway, more attractive to other regions. Unfortunately, our cooperation with Belarus and other countries points out just how non-competitive we are in this area.»

Full article here

GROWTH: taxes for business in Latvia – the most attractive among Baltic States

Latvia’s tax system is the most attractive among Baltic States and 13th most attractive among 190 countries of the world, according to the latest study performed by the World Bank and PricewaterhouseCoopers on tax systems around the world.

Estonia is ranked 14th and Lithuania is ranked 18th in the Paying Taxes 2018 rating.

It is mentioned in the rating that the general tax rate in Latvia is 35.9%. The time spent in Latvia paying taxes is 169 hours. The total number of tax payments in Latvia is seven. The tax rate in Estonia is 48.7%, the time spent paying taxes is 50 hours, and there are eight tax payments in total. The tax rate for businesses in Lithuania is 42.7%, time spent paying taxes is 109 hours, and there are eleven tax payments in total.

The average EU and EFTA tax rate is 39.6%, the time it takes for taxes to be administered is 161 hours, and the total number of tax payments is twelve. The average tax rate for companies in the world is 40.5%, the time it takes for taxes to be administered and processed is 240 hours, and a total of twenty four payments are required.

The most attractive tax system, according to authors of the study, is Qatar, followed by United Arab Emirates, Hong Kong, Iceland, Bahrain, Kuwait, Singapore, Denmark, New Zealand and Mauritania.

Full article here

OPINION: Ušakovs offers unhealthy policy, Harmony is used as Lembergs’ «satellite party»

«Cooperation between Harmony and Aivars Lembergs’ Union of Greens and Farmers has always existed. It existed even before Harmony first appeared in Riga City Council. The situation is the same in the Saeima, even though Harmony is in the opposition. Still, in situations when one or the other matter important to Lembergs appears, one does not have to be a great politologist to notice the ties between those parties. Other times it seems like Harmony is being used as Lembergs’ satellite party,» said former Harmony member, financier and owner of Laika stars business Vadims Jerošenko.

«The policy realized by Harmony on the inside by Nils Ušakovs is absolutely unhealthy. Right now it is beneficial for the party to be in opposition,» says Jerošenko.

He predicts that if, for some reason, Harmony forms a coalition with UGF during Saeima elections in 2018, it will be hard for Harmony to take on that kind of responsibility, because the party is not used to it.

Still, Jerošenko leans more towards the thought that UGF will not form a coalition with Harmony . «It could happen if several smaller parties make it to the Saeima. UGF’s first attempt at cooperation in the Saeima will be with the National Alliance,» he predicts. «If any of the right-wing parties manage to get a large number of deputies in the Saeima, UGF may try to form a coalition with them. But if that fails, UGF may consider forming a coalition with Harmony.»

Full article here

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Citadele Index: businessmen are more optimistic about economic growth

After a four-year gap, optimism has been noticed in all of Latvia’s business sectors. For the third consecutive quarter Citadele Index value exceeds 50 points. Businessmen are also positive about the country’s economy and their own finances, according to the final Citadele Index study for 2017.

Bank of Latvia increases GDP growth outlook to 4.7% for 2017

Bank of Latvia has decided in increase gross domestic product growth outlook from 4.2% to 4.7% for 2017, as reported by the bank’s governor Ilmārs Rimšēvičs.

Latvian residents’ opinion of government’s work remains negative

Latvian residents voiced the biggest degree of dissatisfaction about the development of the situation in Latvia and the work performed by the government. Although the previous evaluation of government’s work had increased by four points, it has since declined by two points, according to data from Baltic International Bank’s Latvian Barometer.

Eel fishing to be restricted in Baltic Sea for three months

European Union Fisheries Council has decided to restrict eel fishing for three months in 2018 in all waters, including the Baltic Sea. Although the World Wide Fund for Nature and environmental organization in Europe view it as a notable first step, these efforts are unlikely to have a major impact on the most important problem – eel population continues declining rapidly, as noted by WWF.

LCCI: increase of electricity bills for thousands of companies in unacceptable

Latvian Chamber of Commerce and Industry (LCCI) categorically opposes increasing electricity bills for the majority of small and medium-sized companies due to mandatory procurement component’s differentiation. The organization believes that this would basically introduce a new additional tax, making them even less competitive.

Head of Latvian Association of Regions to spend Christmas thinking on remaining in the party

Dissatisfied with multiple decisions made by Latvian Association of Regions (LAR), Riga City Council member Mārtiņš Bondars will spend the holiday thinking about his place in this political party, as he mentioned in his interview to Rīta panorama or LTV.

Estonian fund permitted to purchase several Latvia energy production companies

Latvian Competition Council has permitted Estonian fund to purchase several energy production and agricultural companies.

Meat processing giant sees room for growth in ready-to-eat foods

Consumption in the meat market segment of ready-to-eat foods is growing quickly, evaluated Finnish meat processing group HKScan that is planning to invest eight million euros in its factory in Estonia.

To fight for national minority schools, Russian representatives promise to hold a referendum

Defenders of Russian schools in Latvia promise to organize a referendum for autonomy of national minority schools, said co-chairman of Latvian Russians Association Miroslavs Mitrofanovs in regards to the transition to education only in Latvian language.

Tax payment process from capital growth to change in Latvia

As part of the tax reform, changes will be added to the Personal Income Tax Law starting from 1 January 2018. One of the changes is associated with payment and declaration of income from capital growth. The tax rate and the term for submission of declarations on income from capital growth will change next year.

Tusk deems EU migrant quotas ineffective as some states oppose taking in migrants

Donald Tusk, the head of the Council of the European Union and chairman of this week's EU summit, has evaluated that mandatory EU-wide quotas are ineffective and that there is a split between east and west as regards asylum policy.

Riga City Council’s 2018 budget – poorly planned or well-developed?

As the vote for the 2018 budget of Riga City Council draws near, representatives of all opposition parties say they will not support it as long as politicians of the ruling coalition continue viewing the city’s most important financial document as good and aimed at development.

Euro area economy has grown quicker than expected, European Central Bank estimated

Growth has been at a faster pace in the eurozone prompting the European Central Bank to raise its economic growth forecasts.

Weekends in Latvia expected to be snowy

A layer of snow will form in Latvia’s central and western regions that will remain until the middle of next week, as reported by State Environment, Geology and Meteorology Centre.

Opinion: Latvia at risk of restricting healthcare to 300,000 people

Kustība Par! political party has sent a letter to Latvia’s President Raimonds Vējonis, asking him to return to the Saeima the recently approved law on healthcare funding legislative draft. According to the party, the law restricts healthcare for 300,000 people in Latvia.

Lithuania’s 2018 budget focuses on spending cuts, NATO commitment and social security

Lithuania's 2018 budget, approved this week by the Seimas, Lithuanian Parliament, makes history for being the first budget ever with fewer spending for the governmental sector, the commitment to NATO of earmarking 2 per cent of the gross domestic product to defence and bigger allotments for social security. The budget was adopted by 84 MPs, 29 voted against, with 15 abstentions.

EU member states have to strengthen measures against sexual abuse of children

Member states of the European Union have to take more serious measures and cooperate more intensely with Europol and information technology industry to better combat sexual abuse of children, as noted by members of the European Parliament.

Latvian parliament views initiative for changing VAT rate for food product

On Thursday, 14 December, Latvia’s Saeima made its decision on the collective application that proposes reducing VAT on everyday healthy food products and increasing VAT on unhealthy products.

Maxima: residents have become more conservative in their choice of products

In Q2 and Q3, a higher degree of conservatism was noticed in residents’ choice of products. The number of buyers who gladly purchase new products has declined, whereas the number of buyers who do not change anything in their purchasing habits has increased, according to results of a study performed by Maxima.

Civil processes to be sped up and simplified in Latvia

On Thursday, 14 December, Saeima supported amendments to the Civil Process Law in the final reading. Amendments propose several major changes to the process of review of civil processes to make court sessions quicker and more efficient.

State Auditor dissatisfied with parliament’s slow legislative process

Latvian State Auditor Elita Krūmiņa plans to inquire to the Saeima about the delay with the approval of the legislative draft on the expansion of authority of her institution, as she mentioned in an interview to Rīta panorama programme of LTV.

Aldaris commences exports to France, China and Netherlands

Aldaris concludes 2017 with three new export contracts, commencing exports of products to China, France and Netherlands. Until now Aldaris has exported products to eight markets, with the largest one being United Kingdom, taking up 78.71% from Aldaris export volume, as reported by the company.

Estonian budget passed with 0.25 billion-euro deficit

The Estonian Riigikogu with 55 votes against 41 has passed the country’s 2018 state budget bill planning to spend by 0.25 billion more than it is planned to earn.

AFSAL: loan requests in non-banking industry are declined in 69% of all cases

In the first six months of 2017 Alternative Financial Services Association of Latvia (AFSAL) issued a total amount of EUR 84.7 million in consumer loans. No increase is noted in this amount when compared with the same period of 2016. Increase did not exceed 0.2%, as reported by the association.

European Parliament supports changes for combating activities detailed in Panama Papers

Public registries with names of true owners of businesses, effective protection of whistle-blowers and stricter requirements for financial intermediaries are some of the proposals intended to assist with the fight against tax avoidance, as noted by members of the European Parliament.

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