bnn.lv Latviski   bnn-news.com English   bnn-news.ru По-русски
Ceturtdiena 23.11.2017 | Name days: Zigfrīda, Zigrīda, Zigrīds
LatviaLatvia

Dombrovskis: crisis is over for average household

FaceBook
Twitter
Draugiem
print
(No Ratings Yet)

Baltic news, News from Latvia, BNN.LV, BNN-NEWS.COM, BNN-NEWS.RU

Vyacheslavs Dombrovskis

In terms of whether Latvia has overcome the crisis, it is important from which aspect this issue is considered – the recession has ended for the average household, yet there are still many people who would perceive this statement as a joke, Vyacheslavs Dombrovskis, author of Zatlers Reform Party‘s economic platform, indicates in an interview to the news portal BNN.

Based on the theory that a recession occurs in a country when its GDP falls for two quarters in a row, it is also believed that the crisis is over when the GDP grows. So according to this theory, we can claim that the crisis has ended, because the GDP reflects what is happening in the national economy, Dombrovskis emphasizes.

He adds that growth has resumed for average businessmen, although there are still many companies facing recession. Looking at the national economic segments, there is two-speed economic development in Latvia. Export-oriented companies are expanding, while those focusing on domestic consumption are still struggling with an economic dip.

Dombrovskis believes that high unemployment also confirms that the crisis is not yet past, as there are still many people out of work, including those permanently unemployed.

It would only be possible to argue that the crisis is over for absolutely everyone if there is a natural unemployment rate – not more than about 6–8%, Dombrovskis says.

While Martins Bondars, former head of Latvijas Krājbanka, is confident that all the recipes for exiting the crisis Latvia is bragging about and describing in books is absolute nonsense.

«To put it mildly, the government’s claim that the crisis is over is not true. Inflation in Latvia is higher than in the eurozone. Also, trade deficit has remained negative and the lat has been overvalued. Moreover, Latvia has spent billions from the borrowed funds, thus boosting the government debt. Hundreds of thousands of people have left the country. The question is – what economic growth can Latvia expect in the long run, if such growth is always based on technology and people?» Bondars pointed out to the newspaper Delovijie Vesti.

Bondars proposes his own recipes for getting out of the downfall. In his view, Latvia has to understand whether it is capable of joining the eurozone in 2014, which would not be bad, since it would solve many issues. Also, unnecessary foreign exchange risks would be averted. I see that the Bank of Latvia is not prepared to use monetary regulation instruments – then why do we need our own currency? Basically, the Bank of Latvia is an organization merely carrying out the functions of a money-printing machine, Bondars says.

At the same time he is convinced that if Latvia fails to join the eurozone in 2014, it should stop «harassing» its residents and businesses, giving up a fixed exchange rate for the lat.

The ex-banker also offers another option. It is implementation of a stern and clear insolvency mechanism that would take up to one year, instead of 2– 3 years, thus enabling faster asset return in the economy.

He also proposes to secure the budget deficit at zero level and revise the state administration system, based on the fact that only 1.9 million people are currently living in Latvia, instead of the previous 2.3 million.

Overall, Bondars is quite skeptical about the Prime Minister Valdis Dombrovskis’ book, which describes how the Latvian government tackled the crisis. No one in such renowned institutions as Cambridge or Harvard refers to Latvia as a country with outstanding abilities in crisis management. We ourselves are writing textbooks and quoting them. I know only one similar country to do so – the USSR. It also claimed to know everything about a better life, and where is the USSR now? It collapsed as a stack of cards, Bondars notes.

Also shortly after the book came out, Dombrovskis admitted to the portal ir.lv that he had been skeptical about Latvia’s selected internal devaluation path right from the start.

The Prime Minister Valdis Dombrovskis and the well-known economist Anders Åslund’s book How Latvia Came Through the Financial Crisis (In Latvian – Kā Latvija pārvarēja finanšu krīzi) describes and analyzes the Latvian anti-crisis program, defends the decision to keep the lats exchange rate against the euro, as well as points to what other countries could learn from Latvia’s experience.


Leave a reply

Ķuzis: 94% of sex crimes against children are committed by people they know

Approximately half of sex crimes committed against minors take place on the internet, said Chief of State Police Ints Ķuzis at a press-conference on protection of children against sexual violence.

European Parliament approves use of EU Solidarity Fund’s advance payments

European Parliament’s Budget Committee has approved MEP Inese Vaidere’s submitted report on the use of advance payments from the EU Solidarity Fund in 2018, as reported by European People’s Party group Latvian press and communication advisor Ģirts Salmgriezis.

Authorities unmask illegal trade of products made from protected animals

Nature Protection Office and State Police have stepped up their efforts to increase control over trade of products made from endangered and protected species in the past month. Authorities have already confiscated different goods made from animals protected in Latvia and the world.

Swedbank survey: youngsters want stability; belief in Latvian labour market grows

Stability and income predictability are two of the most important values for Latvian youngsters when planning their future jobs. According to a survey performed by Swedbank, 53% of youngsters would gladly start working in an existing company.

Myanmar and Bangladesh to sigh refugee return agreement

In South-Eastern Asia, Myanmar plans to sign an agreement with neighbouring Bangladesh on the return of hundreds of thousands of Rohingya refugees, who have fled to the latter, while rights organisations point to atrocities committed by Myanmar's military.

Polish shipbuilder accused of bribing Port of Tallinn management

A senior executive of Remontowa Shipbuilding, a Polish shipbuilding company, is facing accusations of handing large bribes to former senior figures Port of Tallinn, the Estonian state-owned port operator.

Lībiņa-Egnere may be appointed head of Saeima’s National Security Committee

Unity member Inese Lībiņa-Egnere may be appointed as the new head of Saeima’s National Security Committee, as reported by Latvijas Avīze.

Expert: real estate transaction volume this year may reach 100 million euros

The volume of commercial real estate transactions in Baltic States may exceed EUR 1 billion. Latvia, meanwhile, remains behind its neighbouring countries because the volume of transactions in the country may reach EUR 100 million, says CEO of Colliers International Deniss Kairāns.

Finnish medication prescriptions to be valid in Estonia

In Estonia, Finland's digital prescriptions of medications will be valid from summer 2018 and vice versa – from around mid-2019.

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.

Family of killed Maltese journalist take police to court

The family of the killed Maltese journalist Daphne Caruana Galizia has sued police believing that it does not perform an impartial investigation.

Saeima reduces VAT for vegetables, berries and fruits typical for Latvia

Starting 2018, a reduced VAT rate will be applied for fresh fruits, berries and vegetables in Latvia. This is provided by amendments approved by the Saeima on 22 November for Law on Value Added Tax.

Georgian anti-terrorist raid ends tragically

In the Georgian capital Tbilisi, security officers have conducted an anti-terrorist raid in an apartment, where a shoot-out has started and three suspected militants and a special forces' soldier have been killed.

Jerošenko: 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 Concord 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...

Bosnian Serb commander punished with life imprisonment for Srebrenica

The UN the International Criminal Tribunal for the former Yugoslavia handed a life imprisonment sentence to Ratko Mladić after it found the former commander of Bosnian Serb forces guilty of genocide and crimes against humanity committed in the 1990s during the Bosnian War.

EC positive about Latvia’s 2018 budget project

Based on the conclusion from the European Commission, Latvia’s budget project for 2018 fully fits conditions listed in the Stability and Growth Pact. In accordance with EC’s estimates, the structural balance of Latvia’s general budget is viewed at -1.8% of GDP. Government budget expenditures, on the other hand, are expected to grow by 7.1 percentage points.

Producer price level in Latvia declined 0.2% in October

Compared to September, the level of producer prices in Latvian industry dropped by 0.2 % in October 2017. Prices of products sold on the domestic market decreased by 0.5 %, while prices of exported products went up by 0.1 %.

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.

Antāne: 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.

In pictures: Museum of painter, Holocaust survivor Bak opened in Vilnius

In Vilnius, a museum to Jewish-Polish painter Samuel Bak has been opened. During the occupation of Lithuania by the Nazi Germany, the artist survived the Holocaust in the country.

Ratio of old people and invalids on a rise among unemployed people

The total number of unemployed people has been decreasing in recent years. However, the ratio of old people and invalids continues increasing in the ranks of unemployed people. On top of that, the number of lasting unemployed people remains high and largely unchanged in the country.

Saaremaa looking into possible ferry traffic to Latvia

The local government of the largest Estonian island is looking into possible interest of five shipping companies in opening ferry traffic between Saaremaa and Latvia.

Balta: exhaustion and overload are the most common causes for accidents at work

More than EUR 20,000 has been paid in compensations for injuries acquired at work this year so far, according to information from insurance association Balta. Compared with the same period of last year, the number of accidents has grown 40%.

Estonian town tempts population to reregister with spa in Latvia and 100 euro payment

The town of Keila, located 25 kilometres away from Tallinn, has started a one-and-a-half month campaign to motivate its residents to register back in the town as many of them have registered in the Estonian capital, which grants free public transport to its population.

EU to impose fine to Poland if logging in Białowieża forest not stopped

The European Court of Justice has issued to Poland a 15-day deadline to provide proof that the country has fulfilled the court's ruling to quit logging in the ancient Białowieża forest threatening with a daily fine of 100 000 euros if it fails to prove this.