Latviski English По-русски
Friday 23.03.2018 | Name days: Mirdza, Žanete, Žanna

Economic Diary of Latvia. The link between trust and savings

(No Ratings Yet)

Baltic news, News from Latvia, BNN.LV, BNN-NEWS.COM, BNN-NEWS.RUThe situation surrounding the 2016 budget of Latvia remains tense. The Saeima has approved the legislative draft in the first reading this week. This comes as no surprise. What is surprising is that the document continues being successfully approved even though no one likes it and criticisms continue showering down on it.

In accordance with the established tradition, the fiercest critic of the budget is the Bank of Latvia. Ilmars Rimsevics, Governor of the Bank of Latvia, continues criticizing the budget. The head of the bank’s Monetary Policy Department Uldis Rutkaste joined him in his hate of the budget. He and his chief believe Latvia must not live in debt (the budget of 2016 contains 1% deficit). In addition, the state debt continues growing, and it is worth thinking about revenue to cover it. But where to find the money? The expert believes the government does have a plan in place. With that, residents can expect certain taxes going up in the near future and new taxes popping up soon. In a situation when there is no stability anywhere, it will only create more uncertainty, which will no doubt make investors even more cautious than they are now, believes Rutkaste.

Finance Minister Janis Reirs believes Latvia’s budget for 2016 will allow the country to maintain its status as one of the most rapidly growing economies in Europe and Eurozone. According to the minister, future budgets will be focused on providing stable economic development. What else would he say? Admit work on the budget plan was sloppy?

Opposition parties, on the other hand, can say whatever they want, and they do. Leader of Latvian Regional Alliance Martins Bondars deserves a special mention: he compared the budget plan to an army boot that doesn’t fit. In addition, he believes that applies to Latvia’s budget for 2016 – it doesn’t fit. Bondars added that the country is hungry for more rapid economic growth. The budget plan for 2016, unfortunately, doesn’t mention development.

President Raimonds Vejonis has criticized the budget as well. He said many people remain dissatisfied with the budget development process.

The president believes it is necessary to introduce a regulation that would govern annual review of base budget expenses by the Cabinet of Ministers in order to secure more effective and comprehensive use of budget funds.

Prime Minister Laimdota Straujuma admits defence has been chosen as a priority as a necessity. According to her, this priority was forced by recent geopolitical developments outside of Latvia. Had there been no problematic developments, it would have been better to use this money to improve healthcare in Latvia. Instead healthcare improvement measures will be a priority for 2017 budget, said Straujuma.

Every man for himself

The population does not expect any miracles from the government. People have long since learned to fend for themselves.

First of all, according to results of a survey carried out by SKDS, 74% of Latvian residents do not trust the Latvian parliament.

Secondly, this is one of the reasons for…the improved financial state of Latvian residents in 2015. According to results of the Baltic Household Outlook by SEB Bank, value of assets has grown more rapidly than the size of commitments. This means people have started making savings more actively without paying much attention to bank loans or the state.

Calculations in all three Baltic States have shown that savings of Latvian and Lithuanian depositors who already had savings on their accounts (at least EUR 1.6 thousand) have grown more rapidly than savings of other depositors in 2015.

Successful businessman = dishonest person?

Another interesting piece of research has been published by EY this week. According to information compiled during the research, nearly half of Latvian residents believe successful businessmen are dishonest people.

45% of respondents said successful businessmen are not always considered honest people. Approximately 48% of respondents have said successful businessmen are considered to be tied to state governments or politics. 30% of respondents believe successful businessmen are just people who ‘got lucky’.

12% of respondents believe successful businessmen are considered creative and active people.

Russian-speaking residents are somewhat more positive than Latvian-speaking residents in their opinion about businessmen. 39% of Russian-speakers and 50% of Latvian-speakers agree with the statement that most businessmen are regarded as dishonest people in Latvia.

Earlier SKDS had published a detailed survey that yielded interesting results: 75.2% of respondents believe the country is managed in compliance with interests of a small group of influential people. Often such groups consist of ruling political parties and commercial structures related to them. The banking system is disliked by Latvian residents the most. According to hem, it is tightly linked to the interests of certain politicians and if one of the main reasons for the country’s financial failures.


Leave a reply

Baltic shareholders agree to keep Baiba Rubesa in charge of RB Rail

RB Rail CEO and board chairperson Baiba Rubesa will keep her post. This was decided by shareholders during the 22 March meeting. «The supervisory council had previously mentioned the CEO’s contribution to the company’s development. Still, we intend to find solutions and continue realizing Rail Baltica project,» said RB Rail Supervisory Council chairperson Riia Sillave.

Syrian rebel groups in eastern Ghouta announce ceasefire

In the besieged eastern Ghouta territory in Syria, which has been under heavy air strikes and artillery fire for about a month, several opposition rebel groups have agreed to ceasefire.

EU member states on Skripal attack: «Highly likely» Russia was responsible

The European Union has stated it would recall its ambassador to Moscow for consultations after heads of member states and their governments agreed it was very likely that Russia was responsible for the attack with a chemical weapon on a Russian-British double agent.

Weather to remain cold in Latvia until Easter; more snowfall expected

Weather in Latvia is expected to become cold again after a brief period of warmth. Air temperature will drop again at the beginning and the middle of next week; some areas may experience frost again, as reported by Latvian State, Environment, Geology and Meteorology Centre.

Farmers in Latvia dissatisfied with resolution of electricity-related problems

Two months have passed since farmers in Latvia had received unjustifiably large electricity bills. Countless meetings and discussions have taken place in those two months. Unfortunately, no decisive measures have been undertaken to resolve the problem. Farmers are confused with decision-makers’ incisiveness in a matter important to the national economy, as noted by the Farmers’ Saeima.

Life after 25 May: is this the end for free publication of photo galleries from events?

Many of us like to check out photos from concerts, conferences or sport events on gallery portals and social networks to have a look at guests of those events. However, after 25 May, when General Data Protection Regulation (GDPR) comes into force, the situation will no longer be the same.

Saeima to establish legal framework for Baltic cooperation in disaster prevention

On Thursday, 22 March, Latvian Saeima supported a legislative draft, ratification of which will help create legal framework with other Baltic States in prevention of disasters, as reported by the parliament’s press-service.

Number of complaints with postal services on a rise in Latvia

Public Utilities Commission has compiled information about complaints submitted by residents in regards to postal services in 2017. The number of complaints has increased alongside opposing views about package terminals – the regulator has received 37 complaints in total.

Output of livestock products in Latvia increased in 2017

Compared to 2016, output of meat grew by 4.6 % and output of milk by 1.4 % in 2017. In 2017, in Latvia 91.2 thousand tonnes of meat were produced, which is 4.0 thousand tonnes or 4.6 % more than in 2016. The most significant increase was observed in the output of poultry (of 11.3 %) and pork (4.7 %).

Turkey's offensive in Syria condemned by NATO ally Germany

Angela Merkel, the head of the German federal government has stated that Turkey’s military offensive in the northern Syrian town of Afrin was unacceptable and she blamed Russia for simply watching, while attacks by Syrian government forces on besieged eastern Ghouta continue.

Finance minister still believes tax reform in Latvia has brought results

«The tax reform has given us the results we had expected, especially in regards to combating envelope wages,» said Latvia’s Finance Minister Dana Reizniece-Ozola in an interview to 900 seconds programme of LNT.

Planned hospital reorganisation in Lithuanian regions irks both mayors and patients

If the plan of the Lithuanian Ministry of Health to overhaul treatment services in the provinces does not hit a snag, the rural hospitals will be soon providing only essential care and nursing, the focus will be on out-patient care and treatment will be available only in larger county hospitals.

Ventspils beach high in popularity this week; Lembergs gets spotlight time as well

Ventspils ended up in the spotlight in an unusual way this week: seals washed up on the beach there. Animal Freedom emphasizes that human contact with baby seals would hurt them. Residents are asked to maintain at least 50 m distance from them. However, the suspended Mayor of Ventspils Aivars Lembergs decided to take photos with baby seals and publish them on his Facebook profile.

Ombudsman: problems in nursing homes and social care centres are associated with lack of funding

Problems in nursing homes and social care centres are largely associated with lack of funding, because it is not possible to perform high-quality work using currently available resources. This is the responsibility of ministries and the government, as ombudsman Juris Jansons mentioned in an interview to Latvijas Radio.

Estonian music authors receive record royalties for 2017

The organisation, which is tasked by collecting royalties for local and foreign music in Estonia, the Estonian Authors' Society, has received six million euros in royalties in 2017, which is its record level.

Facebook sorry for permitting exploitation of 50 million user data in politics

Facebook CEO Mark Zuckerberg has apologised for the social network failing to ensure enough privacy to its users that allowed for data on about 50 million of its users to abused by a political consultancy firm.

Zhdanok’s replacement to promote non-citizen matter in European Parliament

Miroslavs Mitrofanovs, who has taken Tatyana Zhdanok’s place in the European Parliament, plans to promote the matter of non-citizens in the institution.

Riga City Council committee supports increasing municipalities’ expenditures by 42.38 mln euro

Following an initiative from the Financial Department, the outlook for the municipality’s base budget revenue has been increased by EUR 1.66 million for 2018. The expenditures portion of the budget is planned to be increased by EUR 42.377 million, as reported by Riga City Council.

French ex-President named suspect in Libya funding case

In France, its ex-President Nicolas Sarkozy has been named as a suspect in the formal investigation for alleged illicit campaign financing, misappropriation of public funds of Libya and passive corruption.

Finance sector’s development council supports prohibition of shell companies

On Wednesday, 21 March, Latvian Prime Minister Māris Kučinskis’ managed Finance Sector’s Development Council supported initiative on prohibiting shell companies, as confirmed by the prime minister.

Level of producer prices in Latvia’s industry is up 3.4%

Compared to January, level of producer prices in the Latvian industry rose by 0.5 % in February 2018. Prices of products sold on the domestic market grew by 0.7 %, but prices of exported products went up by 0.3 %.

Minister: Latvia is far behind its neighbours in terms of digitization and e-skills

In terms of digitization and e-skills, Latvia is far behind its neighbouring countries and the rest of Europe, said Latvian Economy Minister Arvils Ašeradens in an interview to Latvijas Radio.

OECD: Latvian employees work longest hours in Baltics

In a comparison of Baltic countries per average annual hours worked, the Organisation for Economic Cooperation and Development has found earlier this year that the average Latvian worker spends 1,910 hours at work, followed by the Lithuanian employee with 1,885 hours and the average Estonian worker with 1,855 hours.

12th Saeima failed to complete half of its pre-election promises in field of justice

In 2014, Delna – society for openness and Providus think tank received support from all parties represented in the 12th Saeima in regards to an action plan to help strengthen the rule of law in the country.

Russia carries out military drills in Gulf of Finland

Russian Defence Ministry has stated that in the Baltic Sea Gulf of Finland, which has Finland, Russia and Estonia in its coastline, the Russian military has performed drills for its tactical special operations units.