Latviski English По-русски
Friday 21.10.2016 | Name days: Severīns, Urzula

Economic Diary of Latvia. The fairest budget of them all

(No Ratings Yet)

Baltic news, News from Latvia, BNN.LV, BNN-NEWS.COM, BNN-NEWS.RUThis week, the Latvian Saeima approved the state budget of 2016 in the final reading. Prime Minister Laimdota Straujuma said that the 2016 budget is a budget of every Latvian resident. She also said that the government did everything it could to balance interests of different groups of residents and reduce income inequality.

Official priorities of the 2016 budget include internal and external security, better accessibility of healthcare and improved education quality. Unfortunately, measures to improve the two aforementioned priorities do not include increasing wages of doctors and teachers. What it does include, however, is the allocation of more than EUR 700,000 for the increase of wages of people working in the government. On average, wages of members of the government will grow by EUR 600-EUR 700 per month, which is something doctors and teachers can only dream of at this point.

That said, however, it is hard to notice any signs of combating income inequality mentioned by the Prime Minister. Maybe it all comes down to the fact that the Saeima has also approved a myriad of tax initiatives along with the next year’s budget. These include the adoption of the solidarity tax, keeping PIT at 23%, increasing excise tax on alcohol, oil products, electronic cigarettes and tobacco products and the adoption of gambling fees.

Return of residence permits

Aside from the next year’s budget, there was another major development in Latvia. This one, in contrast to the budget, has gone by largely unnoticed. Members of the Saeima Defence, Internal Affairs and Corruption Prevention Committee have approved the government’s proposal to allow the issue of residence permits or ‘investor visas’ to foreigners who invest EUR 50,000 in a Latvian company and EUR 10,000 to the state budget.

Foreigners will be able to retain a residence permit only if companies they invest in carry out actual business activities and pay taxes. According to amendments foreigners that invest EUR 50,000 into a Latvian company will be eligible for residence permits. The number of employees of such companies must not exceed 50. No more than 10 foreigners that invest money into a single company will be allowed to become eligible for residence permits. It will also be possible to receive a residence permit in exchange for investments of EUR 100,000 in the capital of a company that has more than 50 people and the annual turnover of which exceeds EUR 10 million. In all of the aforementioned cases, foreigners will be eligible to receive residence permits for up to five years.

In addition, Ainars Latkovskis, Chairman of the Saeima Defence, Internal Affairs and Corruption Prevention Committee, has announced that Latvian Security Police has begun checking Russian citizens with residence permits more carefully. This is done to make sure people associated with Vladimir Putin’s regime do not enter Latvia.

Gas – a very strange substance…

The topic of gas tariffs has become topical with the beginning of the new heating season. This week, Aigars Kalvitis, Chairman of Latvijas Gaze, announced that the price of gas is lower in this year’s heating season than it was in last year’s. He explained it with the fact that oil prices are currently low. And because the company calculates gas price based on the average oil price in the first nine months of each year, it can be assumed the heating season will not become troublesome for Latvian residents.

LG supplies gas imported from Russia to Latvian consumers. The desire to leave this energy dependence forces Latvian government to look for alternatives to Russian gas. However, leading specialist of Latvian Energy Council Andris Akermanis has recently announced that the thought of procuring gas from USA, Norway, Qatar or other countries should be discussed in detail. At the very least, politicians should look at this matter from the perspective of transport costs.

Recently voiced statements that Latvia would procure gas from Lithuania at a competitive price turned out false, in the end. This is because liquefied natural gas in Klaipeda terminal is at least one-third more expensive than Russian gas. What is explained to residents as cheap Lithuanian gas is the result of litigation between Lithuania and Gazprom. In 2014, Gazprom and Lietuvos dujos had reached an agreement in regards to a 20% discount until the end of 2015. This discount was offered as compensation for the unjust gas supply price for Lithuania in 2013, which had been higher than that of Latvia. The volume of compensation is EUR 81 million.

Politically speaking, this is presented as an accomplishment of Klaipeda terminal. In reality, it is nothing more than a discount on gas, which is something Latvia’s has no access to.


Leave a reply

Four teachers in Latvia are paid wages that exceed EUR 2,000

In September 2016, the biggest teacher’s salary paid in Latvia with bonuses was EUR 2,260.27, as LETA was informed by Education and Science Ministry.

Producer price level down 1.6% in Latvia’s industry

Compared to August, the level of producer prices in Latvian industry increased by 0.3% in September 2016.

SRS Tax Debt Enforcement Office director Cerneckis steps down

On Friday, 21 October, director of Latvian State Revenue Service’s Tax Debt Enforcement Office Kaspars Cerneckis submitted his resignation.

Bookmakers predict Sadurskis’ remainder in his post for the rest of the year

Latvian Education Minister Karlis Sadurskis has been forced to distance himself from political opponents and teacher trade unions because of criticisms regarding reduced wages caused by the teachers’ pay reform. Nevertheless, political support will keep the minister in his post, bookmakers believe.

Lithuanian military discussing deployment of long-range missiles

A senior Lithuanian military officer has on October 20 stated that Lithuania is considering the deployment of long-range missiles in the country in the framework of hosting a multinational NATO battalion in 2017.

Ukraine in joint declaration with Lithuania, Poland condemns WWII aggressors

The Vekhovna Rada of Ukraine has this week adopted a joint declaration with Lithuania and Poland attaching responsibility for World War II to Germany, the USSR and the international community’s «appeasement policy».

Saeima Budget Committee conceptually approves 2017 budget project

On Thursday, 20 October, Saeima’s Budget and Finance Committee supported the state budget project for 2017, the medium-term budget contents for 2017, 2018 and 2019 and 57 legal drafts associated with the project.

Facebook sorry for removing breast cancer informative video

Facbook has expressed apologies for the removal of a breast cancer informative video shared on the social network by a Swedish foundation.

Two of the last twenty three first refugees have left Latvia

The last two of the first twenty three refugees resettled in Latvia have left for Germany, as reported by LTV.

Pregnant woman in Italy dies after doctor allegedly refused to perform abortion

Police in predominantly Catholic Italy is investigating a case of a woman pregnant with twins dying after miscarriage.

Russia applies discount on transit from Belarus

Russian Railways has applied a 25% discount on petrol, diesel fuel and crude cargo transports from oil processing plants in Belarus to Russia’s north-west ports. With that, Russia has basically provided Belarus with tariffs equal to tariffs in Baltics.

The first container train headed for Riga departs from China

On Thursday, 20 October, Latvian Transport Minister Uldis Augulis, representatives from LDz and YXE International Container Train, multiple Chinese officials and Latvia’s ambassador in China Maris Selga saw off the first test container train from China to Riga.

Customs officials intercept hashish shipment worth EUR 2 million

Latvian State Revenue Service’s Customs Police intercepted and confiscated a shipment of more than 200 kg of hashish worth EUR 2 million, as journalists were informed by SRS Customs Police Director Kaspars Podins on Thursday, 20 October.

SA: Riga Freeport has only realized one of five of our recommendations

Latvian State Audit follows the development of the largest investment projects especially carefully, because the state does not seem to handle them all that well. Krievu Island project is one of the largest investment projects, because there is European Union finances invested in it...

Job seekers in Lithuania want Western salaries, employers dumbstruck

Although Lithuanian labour market is in desperate for workforce, but those willing to toil will nod to a job offer only if the pay is really big. So big that the country‘s hirers feel like grabbing their heads upon hearing the candidates‘ salary expectations.

Overall government budget decreased in 2015

In 2015, the general government budget deficit amounted to EUR 309.0 million or 1.3% of the gross domestic product, whereas the general government consolidated gross debt amounted to EUR 8 846.3 million or 36.3% of the GDP.

SP: claims about Motorola’s murderer are an attempt to show Latvia as the enemy

Latvian Security Police views claims that Donetsk military commander Arseny Pavlov, aka Motorola, was allegedly killed by a hired killer from Latvia named Marks Ozolins is nothing more than yet another attempt at information war aimed to demonstrate Latvia and its citizens and enemies.

Estonian President Kaljulaid not to ask state to pay rent

Estonia’s new President Kersti Kaljulaid will not ask the state to pay rent for using her home unlike the former head of state Toomas Hendrik Ilves did.

Every third coin with Milda’s image has made its way to Europe

Every third euro coin with Milda’s image has found its way to Europe. The proportion of those coins in Latvia is 71% of all euro coins in circulation, according to monitoring data compiled by Citadele Bank’s CBL Cash Logistics service.

Estonia plans to increase female proportion in military

Estonia has announced plans to triple female involvement in the country’s Defence Forces and to expand the list of units accessible to woman soldiers by 2018.

Pre-paid mobile card users to be registered as part of a plan to reduce grey economy

At the meeting of state secretaries on 20 October, a proposal was presented from the transport ministry to begin registration of mobile pre-paid card users.

Next year’s budget plan and other decisions viewed by Saeima this week

On Thursday, 20 October, the Saeima will gather for an extraordinary meeting, during which deputies will discuss the next year’s budget plan and 57 associated legal drafts.

European Space Agency attempts to re-connect to its Mars probe

The European Space Agency has lost contact with its Mars probe on October 19 shortly prior to its planned landing on the planet.

Klauss withdraws from SRS personnel selection process

Kristaps Klauss, executive directors of Latvian Forest Industry Federation, has decided to withdraw from State Revenue Service’s personnel selection process.

Lembergs to continue testifying in court at the end of October

Aivars Lembergs, who is accused of serious crimes, will continue testifying in his own criminal case on 31 October, as confirmed by Riga Regional Court’s press-secretary Raimonds Locmelis.