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Economic Diary of Latvia. About lies, debts and exports

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Baltic news, News from Latvia, BNN.LV, BNN-NEWS.COM, BNN-NEWS.RUThe State Revenue Service, which was one step away from getting a new chief, remains headless. The approval of the sole candidate – Inga Kolegova – was ruined at the least moment by Unity. As it turned out, there were valid reasons for that.

Her approval on Tuesday had to be cancelled due to protests from Unity, which discovered contradictions between Kolegova’s explanations regarding dividends and the information available in public registers.

Although Kolegova stated in her declarations that she has received nearly EUR 1 million in dividends from Pallogs in the past several years, according to information from Firmas.lv database, documents submitted by the company to the Enterprise Register state that owners of the company had decided not to divide revenue.

According to minutes of Pallogs’ shareholder meetings, in the past four years owners of the company decided not to divide the company’s revenue. Minutes are signed by member of the company’s management board Elmars Svirksts and Kolegova’s trustee – her brother, chairman of the company’s management board Maris Zudans.

The report of the company’s management for 2015 mentions that the decision had been voiced to divide up the revenue of previous years. The report is signed by the management board of the company – Zudans, Sviksts and Aivars Erels.

In her income declaration, Kolegova mentioned that she received dividends worth EUR 320,000 from Pallogs in 2015; EUR 380,000 in 2014; LVL 240,000 (EUR 341,500) in 2013.

Soon after, a report came from SRS’ Customs Office that customs officials had detained a car owned by Kolegova’s brother at the airport during a planned inspection. The finance minister, however, said it was nothing more than an attempt to put pressure on Kolegova’s family.

Andris Piebalgs – head of Unity – believes it is necessary to announce another personnel selection process. According to him, nothing bad will happen if a new head of SRS is approved in November.

According to Piebalgs, it is necessary to change the criteria used in the selection process and set a higher wage for the head of the institution.

On Friday, Kolegova announced her decision to pull her candidacy from the selection process. This means a new selection process will be organized. Until a new head is chosen, deputy Director Genera Dace Peleka will remain as the acting head of the institution.

Collectable and suspended debts

Although Piebalgs believes SRS functions fine at the moment, the general level of tax debts administered by the service reached EUR 1,425 billion as of 1 August 2016. 62.36% of this amount (EUR 888,890,000) consists of suspended taxes.

The amount of debts of the main state budget reached EUR 935,523,000. That of municipal budget reached EUR 322,150,000. The amount of debts for social insurance payments reached EUR 167,770,000.

The total amount of debts has grown 0.63% since the beginning of January 2016, when it was EUR 1,416,000,000. Actual suspended taxes have growth 0.98% in the past seven months.

The biggest portion of debts administered by SRS consists of topical debts – EUR 1,041,000,000 (73.05%).

Suspended debts form 21.86% or EUR 311,610,000. The proportion of extended taxes is equal to 5.09% or EUR 72,544,000. Suspended debts are the ones for which penalties are no longer calculated. They consist of debt for companies declared insolvent.

Enforced debts, according to legislative acts, form EUR 1,032,000,000 or 72.37%. Actually enforced debts form a mere 10.02% or EUR 142,775,000 of the total size of debt.

Debts that are not subject to enforcement form EUR 888,890,000 (62.36% of the total debt size). The biggest portion of those debts (EUR 872,250,000) consists of debts of companies that have no finances or property to be confiscated to repay debts.

Export getting weaker

One more piece of news this week – exports of Latvian goods declined by 2.8% in the first half-year of 2016 to EUR 4,833,000,000, according to information from the Central Statistical Bureau of Latvia.

Latvia exported wood and products made of wood worth EUR 146,046,000 (17.9% of the total export volume) in June, which is 7.1% less in comparison to May. Exports of electrical appliances reached EUR 93,038,000 (11.4%), which is 17.2% more in comparison to the previous month.

The general export growth of 2016 is expected to be negative, but exports of Latvian-made products may yet grow 2-3%, believes Citadele economist Martins Abolins.

At the same time, he points to the fact that major uncertainty in exports of 2016 is associated with grains, exports of which depends on this year’s yield and global prices, which have already declined in comparison with the previous year.

According to Abolins, indexes of Latvia’s exports are affected by the dropping prices on oil, food products and other resources, as well as generally low activity in world trade. Although June’s exports of goods remained basically on the level of the previous year (grew 0.4%), exports also declined 2.8% in the first six months of 2016.

Rail Baltica is given green light

Finally, the government approved the route for Rail Baltica project in Latvia. The only remaining disputed region is Salacgriva. Consultations about it will be held with the European Commission soon.

The Cabinet of Ministers has ordered Environmental Protection and Regional Development Ministry and Transport Ministry to work with Salacrgiva Council and European Commission Directorate-General for Environment in order to find a solution to the C5 branch of the railway line through Natura 2000 (network of protected areas of European importance) in the valley of Vitrupe River.

According to the state secretary of Environmental Protection and Regional Development Ministry Rinalds Mucins, consultations could begin in September 2016 and last for approximately two months.

Previously, representatives of Salacgriva Council, Transport Ministry and Environmental Protection Ministry failed to reach a compromise for this matter.

Transport Ministry’s representatives have said they plan to submit options for B2-2 branch to the government. According to the plan, this branch would not cross the territory of Natura 2000, as the existing C5 option breaches at least three legislative acts.

Ref: 017.109.109.9878


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