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Wednesday 26.10.2016 | Name days: Kaiva, Amanda, Amanta

Economic Diary of Latvia. What will New Year bring us?

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Baltic news, News from Latvia, BNN.LV, BNN-NEWS.COM, BNN-NEWS.RUIt is good luck to enter the New Year without debts. Unfortunately, not every can afford this. The total volume of debts held by Latvian legal and private persons has reached EUR 1.48 billion, as reported by State Revenue Service.

As of 1 December, the amount of debts of the main state budget was EUR 985.3 million; that of municipal budgets was EUR 323.98 million and the amount of debts in regards to mandatory state social insurance fees was EUR 176.24 million.

Debts of 100 biggest tax debtors before the state budget exceed EUR 245.1 million. Yevgeni Yakovlev is in the lead – he owes the sate EUR 19.16 million. He is followed by Asiva (EUR 9.7 million) and AVT Nafta (EUR 8.84 million). The TOP 10 tax debtors consists of Vadim Mitrofanov (EUR 8.8 million), Krāsainie lējumi (EUR 8.47 million), Bebriko Ltd. (EUR 8.18 million), Eco Tyre Baltics (EUR 7.69 million), Baltic Lumber Products (EUR 5.46 million), Future Vision (EUR 5.13 million) and East-West Transit (EUR 4.04 million).

The list also mentions companies like Dzintars, Nemo Holdings, Baltic Cosmetic Holding and Pilsetmaju instituts Urban Art.

Sanctions everyone is tired of

Another debt that will enter New Year alongside Latvia consists of the European sanctions against Russia. 22 December marked the entry into force of the decision of the EU Council regarding extension of the aforementioned sanctions until 31 July 2016.

Sanctions were introduced after the annexation of Crimea by Russia in March 2014. Sanctions were enhanced after the shooting down of a Malaysian passenger aircraft, which is blamed on separatists in Ukraine. USA and Europe have mentioned that sanctions will be lifted once all conditions of Minsk agreement have been completed.

The EU Council mentioned in its announcement that because Minsk agreement was not complied with to the full extent by 31 December 2015, sanctions against Russia were extended. The EU Council added that it will continue monitoring the situation in Ukraine.

Russian economy gradually becomes weaker as a result of sanctions and declining oil prices. The rapidly growing inflation has struck the wallets of Russian residents, causing dislike among the populace in regards to the country’s current course.

As noted by Washington Post, the decision to extend sanctions at the end of the year was a difficult one for Europe, which has suffered terrorist attacks in Paris and which continues to suffer from the ever increasing inflow of refugees. In addition, there are rumours regarding Greece’s potential exit from Eurozone. Washington Post notes that none of these problems will likely go away in 2016. The question is whether or not European countries will be able to maintain unity in relation to sanctions against Russia under such conditions.

Some EU member states, including Italy and France, that have long-lasting ties with Russia in the field of energy, are becoming increasingly tired of maintaining sanctions.

Italian Prime Minister Matteo Renzi delayed the extension of sanctions until the moment he openly told German Chancellor Angela Merkel that he believes sanctions are a policy of double standards. In 2015, Germany and Russia announced their plans to build a gas pipeline at the bottom of the Baltic Sea to connect the two countries together, circumventing Eastern Europe.

Renzi expressed his dislike in regards to Merkel’s exacted pressure on EU member states all the while Germany takes part in projects that contradict the very point of sanctions introduced against Russia. Italy is irritated by the fact that the new German-Russian project (known as Nord Stream 2) was approved after the cancellation of construction of another pipeline – South Stream – which should have been carried out in cooperation with Italian Eni. Bulgaria, which also suffered losses because of the cancelled South Stream project, has also expressed its dissatisfaction with sanctions.

Different ways of expressing dissatisfaction

Lukoil has expressed its dissatisfaction with sanctions by putting its assets in Latvia and Lithuania on sale. Vagit Alekperov, CEO of Lukoil, explained this decision with growing anti-Russian movement in those two countries. He said there are multiple countries in which his company is having difficulties. Ukraine is one of them.

«We have sold assets in Estonia. Now we have put our assets in Lithuania and Latvia up for sale. We have decided to do so because there are serious anti-Russian movements growing in those countries. With that, the board of directors has decided to leave those countries,» – said Alekperov.

In summer 2015, Estonian Olerex purchased 100% of stock in Lukoil’s subsidiary in Estonia Lukoil Eesti, which owns 37 petrol stations.


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