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Monday 11.12.2017 | Name days: Valdis, Voldemārs, Valdemārs
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Economic Diary of Latvia. All entrepreneurs to be made honest

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Baltic news, News from Latvia, BNN.LV, BNN-NEWS.COM, BNN-NEWS.RULatvia’s presidency over the European Union Council concluded this week. And although some experts are inclined to call Latvia’s presidency «mediocre – without any major failures and achievements», considering that Latvia had no prior experience, the result can be considered significantly better than what experts say.

On Tuesday, 30 June, Latvia’s term in the EU Council officially concluded. Latvia handed the aforementioned post to Luxembourg on 1 July. As noted by some experts, Latvia managed to avoid making big mistakes, but this is most likely related to fears of ‘doing something wrong’.

Latvian President Andris Berzins’ advisor Andris Piebalgs has said that Latvia used the six months of presidency to increase its recognition in the world and strengthen its security and investment attraction ability. Looking at Latvia’s accomplishments in completing different tasks, Piebalgs gave Latvia a solid 10 out of 10.

Nevertheless, Latvian Foreign Minister Edgars Rinkevics has said that Latvia tried balancing its duties in the EU Council during the past six months.

Latvia carried the burden of presidency in a complicated geopolitical situation. In spite of that, Latvia managed to realize strategic priorities like Jean Claude Juncker’s investment plan. Among other accomplishments besides Juncker’s plan, an agreement was reached with the EU Parliament during Latvia’s presidency that roaming fees would be cancelled in the EU starting from 15 June 2017. For consumers, as explained by Latvia’s Foreign Ministry, this means they will be able to use mobile communication services in EU countries at the same prices as they have in their home country. There will be a transition period, which will begin 30 April 2016, during which roaming fees will be reduced. For Latvian consumers this will mean a reduction of up to four times the current rate?

And although the Easter Partnership Summit did not become a sensation, it was not the failure that was the summit of 2013 in Lithuania. On top of that, there were no prior plans for potentially historic agreements or entry of new member states in the EU.

Latvia and especially Riga were rather popular among foreign tourists during the former’s presidency over the EU Council. This helped compensate the dramatic decline of tourists from Russia.

Al in one boat

The only thing that cast a shadow over Latvia’s presidency over the EU Council was the deterioration of the situation in Greece. Decisions in regard to the Greek problem will be made during Luxembourg’s presidency.

The Bank of Latvia has stated that it does not have any deposits in Greek bonds (the European Central Bank and central banks of some other Eurozone member states have, however). The decline of value of Greek bonds or refusal to comply with obligations by the Greek central bank could insignificantly impact revenue from the monetary policy used by all central banks in Eurozone.

It is also noted that Latvia’s exports to Greece make up a mere 0.1% from the total volume of exports to foreign markets. Latvian banks do not have any investments in Greek government bonds. Furthermore, Latvia will not experience any losses from the possible insolvency of the Greek government.

Funds were paid to Greece as part of financial assistance programme carried out by the European Financial Stability Fund. Latvia is not part of it. Having joined Eurozone, Latvia became a member of the European Stability Mechanism. Payments were made to it, but this instrument is not involved in the provision of financial assistance to Greece.

And although experts and member of the government claim the possible economic default in Greece will not have a major impact on Latvia, it is nonetheless important to be more careful in predictions. This is because Latvia is in the same boat as everyone else – the boat called Eurozone. Financial collapse in a country that has billions worth of debts is not likely to go unnoticed in countries of the monetary bloc.

No matter how difficult the upcoming decision in regard to Greece may be, it is clear that now is the time to act.

Voluntarily or not

Continuing the topic on ‘what to do once patience runs out’, it is worth noting that 1 July marked the entry into force of amendments to the Unfair Commercial Practice Prohibition Law and Law on Advertisements. These amendments expand the authority of the Consumer Rights Protection Centre and other management organisations and increase the maximum size of fines for unfair commercial practices to EUR 100,000.

Amendments to the laws were carried out in order to motivate entrepreneurs to perform honest and fair commercial activities in regard to rules of posting advertisements and allowing them to voluntarily fix any breaches without resorting to fines.

Legislation was not effective enough to keep entrepreneurs away from unfair practices, as it was more convenient for them to pay a fine than to stop cheating.

In order to change this, authorities decided to raise the maximum fine to EUR 100,000, as noted in the announcement of Latvia Economy Ministry.

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