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Tuesday 20.02.2018 | Name days: Smuidra, Vitauts, Smuidris

Economic Diary. Latvia 5th week of 2012

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This week Latvian government demonstrated typical helplessness in solving serious problems in business and economy. But they were aroused with small time home labor.

The poor locksmith

The Competition Council fined the Latvian Locksmith Brotherhood 500 LVL for developing a unified service price list. According to the department, this price list reduces the competition between members of the brotherhood even if the recommended prices are not applied in service cost calculations.

Explanation as follows. You come to receive a duplicate of you key and you were charged, say, 0.5 LVL and not 1 LVL as recommended in the price list. So, the Council believes that there is a price conspiracy, even though the locksmith sold you his services for a cheaper price and you are the one who benefited from it.

Latvian Locksmith Brotherhood has only 30 members; however, the Council managed to find time and research this complicated case thereby using up taxpayer money. Apparently the organization has nothing better to do.

The example of the work done by the French Antimonopoly department is just asking to be mentioned. This department managed to fine thirteen leading perfumery companies 40 million EUR for a price conspiracy. Among the fined companies are: Chanel, Christian Dior, L’Oreal, Clinique, Estee Lauder, Jean-Paul Gaultier, Issey Miyake, Clarins Fragrance Group, Hermes, Guerlain, LVMH Fragrance Brands, Sisheido Europe and Yves saint Laurent. The fine was issued to the Sephora, Marionnaud and Nocibe distribution networks. Every company has to pay from 90 thousand to 4.1 million EUR, depending on the period of membership in the cartel. The companies made deals with retail merchants thereby creating a fixed price and the amount of the maximum possible discount from 1997 to 2000, to support retail prices on a maximum possible level, French Antimonopoly department states.

They’ll grab us by the…wallets, again

On the other hand our Saeima deputies have been busy this week. They introduced amendments to several Laws right in the first hearing.

Amendments to the Law of State Revenue Service widen the authority of SRS in cases of collecting taxes, duties and fines abroad, so that Latvian residents – individuals and legal persons – would not rest knowing that – SRS has a long reach.

Also the parliamentarians supported amendments to the Law of Taxes and Duties specifically the parts linked to cash transactions. From now on legal persons will need to declare all cash transactions worth more than 1000 LVL, even if they were made by individuals. Previously the threshold sum was 3000 LVL. Furthermore the maximum sum of a cash transaction is decreased from 10 to 5 thousand LVL. During the week Saeima deputies also managed to approve the new Law of Credit Registry. The Registry started its work on January 1st 2008, and databases from the registry of debtors are the foundation. The new normative act will not change the credit registry in fact – the information about debtors, their guarantors, sum amounts etc. will still be generalized there. However, in the future access to some parts of this data will be restricted. This way the information about amounts of losses, supply costs, accounting methods of debt obligations, their classification, and quality assessment, amount of savings, main sum and interest rates will only be available to use by the Financial and Market Commission and Latvijas Banka. On the other hand registry members – credit institutions, commercial societies which provide financial services linked to credit risks, savings and insurance societies – will only have access to information that is linked to them. But the debtor and his guarantees will not be able to access this information.

Who says «meow» first?

This event can be considered as no less than a breakthrough in public relationships. Especially if we recall the story about Latvijas Krajbanka collapse, and the panic surrounding Swedbank. The Financial sector development Council has conceptually approved the two level Crisis situation communication plan. If one of the financial sector members has problems, the Finance market and Capital Commission will be the first to respond. It will relay firsthand information to the media, perform first monitoring operations and respond to the consumers’ panic. If the situation does not does not stabilize, the second level of communications will be activated, using which the Prime-minister and ministers can send calming statements to the public. This, according to the plan’s developers, should bring clarity to the process of communications with society and rule out any inter-department discussions about who should be the first to go out to the public and give a speech.

European Commission defends Palink

Palink trade enterprise insolvency, which operates Iki and Cento trade networks in Latvia, has gotten the attention of European Commission Vice-president Vivien Reding and EU internal market commissar Michel Barnier. They wrote a letter to the Minister of Justice of Latvia Gaidis Berzins with a demand to explain some peculiarities of the local procedure of declaring financial insolvency. High ranking European officials did so based on the plea of the German Palink shareholder – Rewe Group Company.

Specifically, the commissars ask whether or not it is possible to challenge the verdict of Riga Kurzeme District Court or to cancel it in a higher instance, as well as what instruments can the Prosecutor General and Supreme Court can use to protest this verdict. The letter also contains one sensitive issue: is it normal to declare an enterprise insolvent, if the reason for this is being argued over in a Court, and the auditors did not conclude the enterprise to have any problems with carrying out their obligations.

According to the authors of this letter, the Court violated a number of norms as well as basic rights of the enterprise by declaring it insolvent. After assessing the answers they expect to receive before the 14th of February, part of Latvia’s funding could be put in question.

BNN already reported: on the 5th of January 2012 Riga Kurzeme District Court declared Palink insolvent based on the plea of Sergey Gushin, who according to the cession assignment received the right to demand 30 thousand EUR from the debt of Palink to the Landeks construction firm.

Here dwells a Russian spirit, this smells of Russia

The only positive note is linked to people coming to our country. When compared to 2010, last year the number of requests to receive Latvian citizenship increased by 18.5% – up to 163.3 thousand. The growing popularity of Latvia among foreigners brings notable benefit to the State budget: the review of requests for citizenship cost these people 3.97 million LVL – by 600 thousand more than last year. Compared to 2010, the highest activity is expressed by Russians (+25%), Belarusians (+16%) and Ukrainians (+28%). As a result people from these three countries brought approximately a half of the aforementioned funds.

State secretary of the Ministry of Foreign Affairs Andris Teikmanis admitted: the contribution of serviced tourists in consular department is hard to evaluate, but overall foreign guests left no less than 150 million LVL here.

Also in comparison to 2010, last year the number of requests for residence permits doubled – up to 3 thousand. And again Russians and Ukrainians lead the way, which is confirmed by statistics of the Citizenship and Migration Department: citizens of these two countries make up more than 80% of investor visas.

According to the data from the Latvian Tour agencies and operators Association, the number of Russian tourists increased last year by 40% in comparison to 2010. And it is likely this is not the last argument in favor of developing first cooperative projects for popularizing Latvian rural tourism in Russia. They will be presented on the Balttour 2012 exposition, which is scheduled to open on the 9th of February.


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Bank of Latvia governor: I have received death threats

«This situation is incredibly complicated. This situation is quite possibly the most complicated one I have ever been in. I feel a great deal of support from people I don’t know, as well as my friends and family members. I have decided to not back down – I am innocent. The the people attacking my reputation have only one goal in mind – to have me step down,» said the governor of the Bank of Latvia Ilmārs Rimšēvičs during a press conference on Tuesday, 20 February.

Proportion of people working in Latvia’s culture sector is larger than the average in EU

The number of people working in Latvia’s culture sector is equal to 4.5% of the total number of employed people in the country. This proportion is also larger than the average one across the European Union, according to data published by Eurostat.

Ministry: idea for compulsory secondary education should be put on hold for now

Considering that Latvia’s Education and Science Ministry has several ongoing industry reforms, it would be best to put the proposal for compulsory secondary education on hold, said Education and Science Minister Kārlis Šadurskis during a meeting of Saeima’s Education, Culture and Science Committee.

Association: ECB should become more involved in resolving Latvia’s financial scandal

Association of Latvian Commercial Banks sees a need for the European Central Bank (ECB) to become more involved in the discussion and help resolve the situation, considering evaluation of ABLV Bank’s business model is in direct competence of ECB.

Hesburger to invest 11.5 million euros in Baltics this year

The largest fast food catering restaurant network in Finland and Baltic States – Hesburger – plans to invest approximately EUR 11.5 million in business development this year. EUR 5.5 million are planned to be invested in Latvia’s market, says Hesburger Development Director Ieva Salmela.

Air temperature drops below -30° C in certain parts of Northern Europe

On Tuesday, 20 February, air temperature in central and northern parts of Finland dropped to -27° C… -31° C in morning hours. In Norway, close to the Finnish border, air temperature has dropped as far as -34° C, according to data from meteorological stations.

FCMC suspects someone may want to undermine Latvia’s financial sector

It is not impossible that someone may want to undermine Latvia’s financial sector, said chairman of Latvian Finance and Capital Market Commission Pēters Putniņš in an interview to Rīta Panorāma programme on Tuesday, 20 February.

European exchange indexes decline; Wall Street enjoys a holiday

European exchange indexes declined on Monday, 19 February. No trading was performed at American stock markets, because the country was celebrating President’s Day.

Party: Latvian banking system’s crisis threatens Skanste neighbourhood's development

There are serious risks associated with European Union’s co-financed project for the revitalization of Skanste neighbourhood, including construction of Skanste tramway line, says member of Riga City Council and For Latvia’s Development party Viesturs Zeps.

Public opinion: KGB documents should be made publicly accessible immediately

Latvia’s society believes the KGB documents should be made publicly accessible immediately. In addition, residents say they are confident in their ability to discuss those documents without the country’s supervision, which takes the form of expert opinions prevailing over society’s moral views, as stated by guest researcher of History Institute of the University of Latvia M. His. Marta Starostina.

For Latvia’s Development: the prime minister is gone, but finance minister claims otherwise

«What we have observed in the past several days is that Latvia’s financial sector has received several heavy strikes as a result of the government’s uncoordinated and chaotic actions. Prime Minister Māris Kučinskis has evidently ‘disappeared’ and offers no clear plans to resolve the crisis, whereas Finance Minister Dana Reizniece-Ozola says different things in every interview. Such behaviour will not help resolve the crisis. It could instead pull the country’s financial sector in a much deeper crisis,» says chairman of For Latvia’s Development Juris Pūce.

Bank of Latvia provided ABLV Bank with a loan of 97.5 mln euros in exchange for securities pledge

The Bank of Latvia has provided ABLV Bank with a loan worth EUR 97.5 million in exchange for securities pledge, as confirmed by the financial institution.

Prime Minister: Bank of Latvia governor is not allowed to take official post

As a security measure, the governor of the Bank of Latvia Ilmārs Rimšēvičs has been applied with a prohibition to take post, said Latvian Prime Minister Māris Kučinskis after a meeting of the Cabinet of Ministers.

Poland's halt to logging in ancient forest came after irreparable damage

Although Poland has stated logging in the old-growth Bialowieza forest has been stopped, Warsaw has failed to reveal the amount of trees already cut down.

«A good friend» pays 100,000 euro bail for arrested governor of the Bank of Latvia

Corruption Prevention and Combating Bureau (CPCB) has applied a bail of 100,000 euros for the arrested governor of the Bank of Latvia Ilmārs Rimšēvičs. The bail has already been paid to the State Treasury account, as confirmed by his lawyer Saulvedis Vārpiņš.

NP: ABLV blames Latvian officials for misleading foreign institutions

Last week, the reputation of Latvia’s second largest bank – ABLV – was seriously impacted. It is believed that money laundering was this bank’s main operation, and that it failed to comply with the prohibition on cooperation with North Korea. The bank is also accused of bribery. US Department of the Treasury Financial Crimes Enforcement Network rarely speaks so directly of any credit institution, says Nekā personīga programme.

Changes to third-country student residence in Estonia to add more responsibilities to university staff

The Estonian government has backed planned amendments are to the Aliens Law implementing an EU directive into Estonian law, which change how third-country nationals on enter and reside in Estonia if they are study or performing research work.

Russia criticises U.S. charges of Russian meddling in U.S. election

The Foreign Minister of Russia, Sergei Lavrov, has criticised the charges announced by the U.S. Federal Bureau of Investigation, against 13 Russian nationals and three companies for election meddling.

Government plans to form four riot prevention units in Latvian regions

The State Police plans to form four riot prevention units in Latvia’s regions, says Chief of State Police Ints Ķuzis.

Syrian Kurdish fighters under attack by Turkey announce deal with Syrian government forces

The mainly Kurdish militia in the north-west of Syria have announced having reached an agreement with the Syrian government for the latter to deploy its soldiers in order to help Kurds repel the current Turkish attack.

NCP: it is highly important to replace management of Bank of Latvia and FCMC

Considering recent events, which have not only impacted the country’s finance sector but also its international reputation, the New Conservative Party (NCP) demands immediate measures to be undertaken to replace the management of the Bank of Latvia and the Finance and Capital Market Commission. On top of that, it is also necessary to perform radical changes in the organization and supervision of those institutions, says NCP chairman Jānis Bordāns.

Air temperature in Latvia to gradually decline this week

On Monday, 19 February, atmospheric pressure will increase slightly in the north. With that, it is expected to snow only around Kurzeme’s south-west. Air temperature in most of Latvia will stay at -1° C… -6° C. In Kurzeme, however, air temperature will be around 0° C… +1° C, as reported by State Environment, Geology and Meteorology Centre.

Week in Lithuania. Lithuania celebrating centennial of statehood

Leaders of European countries gathered in Vilnius on Friday, February 16, to celebrate the 100-year anniversary of restored statehood, and festive events were taking place in many cities and towns of Lithuania.

BNN summary of the week: minister threatened with dismissal; ABLV Bank scandal

BNN offers a summary of this week’s topical news in a variety of categories: Change; Fight; Court; Problem; Decline; Commentary; Future; Proposal

SRS uncovered violations in 169 inspections at catering companies last year

In 2017, the State Revenue Service (SRS) performed a total of 989 inspections at 212 catering companies. This includes 182 thematic inspections for 125 taxpayers. Violations were uncovered in 169 inspections. The most common violation was manipulation with cash registers, according to information published by SRS.