Latviski English По-русски
Ceturtdiena 17.08.2017 | Name days: Oļegs, Vineta

Economic Diary. “Everything is fine, Your Highness”

(No Ratings Yet)

Аuthor: PantherMedia/SCANPIXLooking back at the events of this week, one would think the situation in Latvia is improving: the turnover of retail trade is gradually increasing, salaries are expected to follow soon.

Consumers gladly spend their money

According to statistical data, the sales volume had increased by 2.1% this March. This shows an increase of optimism among consumers. The types of goods they buy shows this as well: products for home improvement, travel and new clothes. This allows specialist to project a rise in consumer activity in the future as well.

It should be noted that sales of food products have increased more than that of non-food products: this trend was the other way around in previous months. The increase of sales in the group of food products is caused by the upcoming celebrations – the lengthy Easter weekends in particular. In an annual outlook, the total amount of retail trade in Latvia has exceeded the index of march 2012 by 8.8%.

Helping the farmers

Things are said to improve for farmers as well. The government is concerned about their competitiveness. It is planned to allocate nearly 129 million LVL for this goal.

In regard to the increase of subsidies, Latvian farmers are, indeed, among the leaders in the EU. But they remain among the last in terms of support volumes. Direct financial support of the EU currently amounts to a maximum of 90 EUR per 1 ha for Latvians. This amount will be 109 EUR per 1 ha in 2013, followed by 196 EUR by 2019. This will put Latvia on even terms with Lithuania, Estonia and Romania. Nevertheless, without additional motivation from the budget, justice is not likely to come soon: neighbouring countries already receive more than Latvia: 117 EUR in the North and 144 EUR in the South.

This is why the Agriculture Ministry asked the government to allocate 129 million LVL for the industry in the next planning period (2014-2020). The offer was provided support. In reality, only part of this amount (39.8 million LVL) will be used as direct subsidies. This will allow Latvia to come close to its neighbours and provide its farmers more or less equal competition terms in a regional perspective.

The remaining 89.2 million LVL are planned to be used by the government to improve rural roads.

There is stability!

Stability is also noted in the financial industry. The increase of non-residents’ deposits to Latvian banks was 162.2 million LVL. This makes the recent events in Cyprus largely irrelevant for Latvian crediting institutions.

According to data from the Finance and Capital Market Commission, the amount of client funds deposited on accounts of domestic credit institutions had increased by 0.2% (20.3 million LVL) reaching nearly 12.8 billion LVL. There was an increase of 162.2 million LVL (2.6%) noted in the non-residents’ segment.

Concession for concession

Organizations that represent the interests of entrepreneurs have supported the initiative to increase minimum salaries to 225 LVL starting from 2014. The consensus was reached as a result of trilateral negotiations of employers, trade unions and the government. The idea came from the Finance Ministry. The increase of salaries from 200 to 225 LVL means an increase of expenses for the employers (+31.02 LVL).

There are some who do not support this initiative, many of them are representatives of small and medium business in provinces. This is a very sensitive group – even the slightest increase of expenses is notable for them. Nevertheless, participants of the discussion had agreed that it is wrong to build an economy with low salaries. According to Eurostat, Latvia currently has the lowest minimum salaries level in the Baltic countries (287.07 EUR).

After having agreed to the increase of minimum wages, entrepreneur organizations believe their next objective is to achieve different benefits.

Lithuanian taxes to impact Latvia

The only category of residents that may experience some tough times in the near future – are owners of cars that are registered in Lithuania. According to Verslo žinios, Lithuanian politicians are planning to increase the vehicle tax rates. This could include the introduction of additional registration fees and a new annual fee. Specific legislative initiatives are expected to be finished this summer. If this comes to pass, Lithuania’s image as an attractive registration location for Latvian cars could suffer a mighty blow.

Current average expenses to register a car in Lithuania are 29 LVL. Estonia’s fee is equal to 137 LVL. Latvia’s registration fee for three years costs 530 LVL.


Leave a reply

Suspects in Europe's insecticide egg scandal before Dutch court

In the Netherlands, two men have been in court in relation to the scandal of eggs containing banned insecticide that has caused an EU-wide health scare and cost millions of euros of damages.

Indian national with fake documents apprehended on Latvian border

An Indian citizen travelling from Moscow on a bus was caught at Terehovo border control point in Latvia for presenting officers a fake EU family member’s resident card. No criminal process was launched. The person returned to the country he was travelling from.

Latvijas dzelzceļš will not have to pay dividends from last year’s profits

The government decided on Wednesday, 16 August, that Latvijas dzelzceļš will not have to pay dividends from last year’s profits, which were EUR 880,998.

Latvian citizenship provided to 103 people

The Cabinet of Ministers has issued an order to provide Latvian citizenship to 103 people through naturalization.

Estonian Inbank's profits reach EUR 5.7 million in six months

Estonian financial services' provided Inbank made a profit of 5.7 million euros in the first half of 2017, which is a 429.4% increase compared to the respective period in 2016.

Agriculture Ministry invites residents to sign up for measures to support fisheries

From 21 August onward, Rural Support Service plans to start accepting applications for projects to receive support from European Maritime and Fisheries Fund’s action plan for development of fisheries in 2014-2020 as part of projects Innovation, Productive Investments in Aquaculture and Fishing and Aquaculture project processing.

Estonia seeks to improve reputation of state as employer

As the Estonian Ministry of Finance wishes to boost the reputation and brand of the Baltic country's public sector, it has announced a procurement tender aimed at preparing an action plan for reaching these goals.

Warning: there may be short-term problems with Swedbank internet banking functionality

Because of Swedbank’s planned IT modernization work scheduled for the night to Thursday, 17 August, there may be short term problems with payment card and internet banking functionality, the bank warns.

Aseradens: neither Usakovs nor Lembergs should be allowed to become prime minister

If he became chairman of Unity, Economy Minister Arvils Aseradens would mobilize democratic forces to prevent the possibility of either Aivars Lembergs or Nils Usakovs becoming prime ministers, Aseradens said in an interview to 900 seconds programme of LNT.

Caksa believes increasing wages for doctors would improve politicians’ credibility

The planned wage increase in healthcare could be the first step towards improving politicians’ credibility, says Healthcare Minister Anda Caksa.

Bill Gates donates USD 4.6 billion, reduces shares in Microsoft

The co-founder of the U.S. computer software firm Microsoft, Bill Gates, has allocated to charity 4.6 billion U.S. dollars (3.9 billion euros), which is the philanthropist's highest donation since the year 2000.

LOSP proposes using electronic packing slip system to reduce fraud

An electronic packing slip system for goods would be invaluable for agricultural goods, because it would help push out and reduce VAT fraud, says Latvian Agricultural Organisation Cooperation Council.

Latvia and Russia agree on exchange of additional 3,000 universal permits for cargoes

Latvia and Russia will exchange 7,000 universal permits for international cargo transports in 2017. This will be the largest universal permit volume in the past 15 years, as reported by Road Directorate.

Sierra Leone hit by tragic mudslide

A tragic mudslide has taken place in Sierra Leone, where flooding in the capital Freetown caused a mudslide, in which nearly 400 people have been have died.

Talks with potential KVV Liepājas metalurgs buyers to conclude in August

Talks with potential buyers of the insolvent KVV Liepājas metalurgs will conclude at the end of August, says representative of the company’s insolvency administrator Dzintars Hmielevskis.

Estonian e-Residency programme in deal with Paymentwall

International payments facilitator Paymentwall in collaboration with the Estonian programme of e-Residency program started this week Passport, a new service, with which businesspeople around the world will have the opportunity to found an EU company and access payment and other supporting services via internet.

Prosecutor: in parallel to Oligarch case, KNAB also worked on other cases

In parallel to the investigation of the so-called oligarch case, Corruption Prevention and Combating Bureau also continued working on other cases, said chief prosecutor Modris Adlers.

62.2% of Latvia’s population was employed in Q2 2017

Since Q2 2016, the employment rate in Latvia has increased by 0.8 percentage points. In Q2 2017, Latvian employment rate (62.6 %) was the highest recorded since Q2 2008 (63.1 %).

LIZDA: many uncertainties about education process appear just prior to the school year

Two weeks prior to the beginning of the new school year there are many uncertainties about the education process and teachers’ wages, said Latvian Education and Science Workers' Union chairperson Inga Vanaga in an interview to 900 seconds programme of LNT.

Several candidates to compete for the post of chairman of Unity

Economy Minister Arvils Aseradens, deputy chairman of Unity Edvards Smiltens and Riga City Council deputy Vilnis Kirsis intend to compete with one another for the post of head of Unity, as confirmed by the party’s representative Elina Bivina.

City of Tallinn urged to quit paying PBK TV 500,000 euros

Tallinn city government should allocate the 500 000 currently spent per year in buying television programmes in the Russian-language TV channel PBK to the Estonian state Russian-language TV channel, ETV+.

Latvia’s wealthiest mayors – Lembergs, Sesks and Pozarnovs

Latvia’s wealthiest mayors in 2016 were Ventspils Mayor Aivars Lembergs, who remains suspended from his post due to multiple criminal processes against him, Liepaja’s Mayor Uldis Sesks and the new head of Baldone County Council Andrejs Pozarnovs, according to information from LETA.

DNB says it has no plans to change ATM system for its clients

Commission for money withdrawal from DNB Bank’s ATMs has been introduced by Swedbank and only for its own clients, DNB Bank’s representatives say.

Rinkevics proposes continuing cooperation with Switzerland

Switzerland’s Extraordinary and Plenipotentiary Ambassador to Latvia Konstantin Obolensky says he is prepared to work to develop relations between the two countries, as well as maintain close ties with Latvian institutions and its people.

BATL: Augulis’ goal is reaching an agreement on increase of cargoes for Latvia

Baltic Association – Transport and Logistics has sent an invitation to Latvia’s Transport Minister Uldis Augulis and Russian Federation’s Transport Minister Maksim Sokolov to find a solution for the catastrophic situation with cargo flow from Russia.

Newest comments