bnn.lv Latviski   bnn-news.com English   bnn-news.ru По-русски
Wednesday 24.05.2017 | Name days: Marlēna, Ilvija, Ziedone
LatviaLatvia

Economic Diary of Latvia. Premature opening of the market

FaceBook
Twitter
Draugiem
print
(No Ratings Yet)

Baltic news, News from Latvia, BNN.LV, BNN-NEWS.COM, BNN-NEWS.RULatvia received one more confirmation that Europe is helpless before the migration crisis and that no one has resources to resolve it. The European Commission has supported German Finance Minister Wolfgang Schäuble’s idea to create an additional fuel tax in the EU. Finances acquired from this tax will be used to finance resettlement of refugees. Latvian representatives in Brussels were the most active lobbyists of this initiative.

Ex-prime minister of Latvia and currently European Commissioner for the Euro and Social Dialogue Valdis Dombrovskis was one of the first to support Schäuble’s idea. «Europe needs fresh ideas to overcome the refugee crisis. Fuel tax on a national or European level could prove a possible source of funding, especially considering that petrol price is currently at its lowest point in years,» – said Dombrovskis.

Artis Pabriks, another Latvian representative, also picked up the German minister’s idea: «This would ensure security, economic growth and social justice for Latvia,» – he wrote on his Twitter micro-blog.

Local politicians, on the other hand, proceeded to heavily criticize the possible adoption of a fuel tax. The parliamentary faction of Latvian Regional Alliance does not support the idea of using revenue from fuel tax to finance resettlement of refugees. «EU member states are desperate to find any options to reduce the consequences of their unreasonable immigration policy. We believe the adoption of additional taxes to resolve the refugee crisis is not worth supporting,» – announced LRA faction leader Dainis Liepins.

Latvian Economy Minister Dana Reizniece-Ozola, who may become Finance Minister in the new government, does not support the possible adoption of the new tax, as well. In her interview to LNT, Reizniece-Ozola said Europe has never had a policy for unified taxes. On top of that, she doubts all countries will come to an agreement. In addition, before adopting such a tax, there should be a plan to use the revenue. Right now, however, it is unclear what that money will be used on – to strengthen borders, provide benefits to refugees or be given to Turkey.

No one knows when the new tax could be adopted. Basically it seems that the costs of resettling refugees will remain on the shoulders of European taxpayers.

An increase of the tax burden means a reduction of real income of residents, which usually leads to a decline in demand and further slowing of economic growth.

This is because the fuel tax will not be isolated just for car owners. Transport costs are an important price-forming factor of any product.

Premature opening of the market

Another European initiative surfaced this week. This one is also expected to have an impact on Latvian companies and consumers. As reported by the German Frankfurter Allgemeine Zeitung, the European Union intends to check all contracts signed between European companies and the Russian Gazprom. This is because European authorities suspect the Russian gas giant of establishing unfair prices. Official Brussels has yet to comment on the article published in this newspaper that allegedly references some internal EU document.

In April 2015, the European Commission accused Gazprom of breaching EU market rules and distorting competition on the gas market of Central and Eastern Europe, where the Russian giant remains the dominating gas supplier.

Now, According to FAZ, EC wishes to receive information in regards to contracts signed with Gazprom, specifically if the Russian company supplies more than 40% of gas consumed in a country.

Meanwhile, Latvian Economy Ministry presented the government with ‘Requirements for supplies and use of natural gas’ for review. This draft will allow companies to procure natural gas from abroad. This document basically provides Latvian consumers who are not households to procure gas from foreign traders by using Latvijas Gāze’s infrastructure.

Chairman of Latvijas Gāze Aigars Kalvitis has announced that this would breach competition rights and basically open the gas market ahead of time.

Positive look at the future

There have been some good news this week. In the annual business risk rating, Coface enhanced Latvia’s B score with a positive development outlook. Latvia’s rating was reduced from A4 to b in 2010. It has remained unchanged ever since.

Coface Director in Latvia Arnis Blumfelds notes: «Economic growth outlook for 2016 is 1.7%. The situation with companies in Europe is gradually improving as well. This is confirmed by insolvency indexes in Western European countries. Latvia stands out with stable growth. This is further enhanced with growing consumption of households in the country and export growth to different European countries at the expense of reduced exports to Russia.»

Ref: 017.109.109.7892


Leave a reply

FM: planned tax reform will create conditions to reduce grey economy

After the publication of specific recommendations for EU member states, the European Commission admits that tax guidelines help resolve last year’s recommendations on reduction of the tax burden for residents with low income.

Economic influence on retail trade depends on migration

Looking at the influence of Latvia’s economy on retail trade industry in Q1 of 2016 and 2017 it becomes clear that future development of this industry depends on migration and inflation growth rates, as concluded in retail trade outlook Maxima Retail Trade Compass.

EC says it has irresistible «carrot» to attract countries to eurozone

EU’s European Commission intends to raise the attractiveness of adopting the euro in eyes of the bloc’s members now having their own national currencies, stated economics and finance commissioner Pierre Moscovici

Antane: government’s indecisiveness and rushed decisions impact transit industry

The refusal of Russian Railways to carry cargoes from Russian ports to Latvia could create a state of emergency for Latvia’s transit industry, says Baltic Association – Transport and Logistics.

Support to Rail Baltica further funding voiced by European Parliament Committee

Political support for continued funding of the railway project Rail Baltica has been acknowledged by a member of the European Parliament Committee on Transport and Tourism.

Kucinskis is not prepared to drop the tax reform

Political parties will have to decide on the extent of realization of proposed tax reforms. Finance Ministry will not work on new proposals, said Latvian Prime Minister Maris Kucinskis in an interview to LNT on Monday, 24 May.

Accessibility to new and effective medicine in Latvia is the poorest in Europe

In terms of accessibility and compensation of new and effective medicine, Latvia is on the last place among EU member states, according to Patients W.A.I.T. Indicator published by European Federation of Pharmaceutical Industries and Associations at the end of April.

Survey: How much time are you prepared to spend on your way to work?

Nearly half of interviewed Baltic residents say they are prepared to spend up to 30 minutes on the road in one direction, according to results of a survey performed by CV Market in Latvia, Lithuania and Estonia.

Latvian ambassador: the ball is on Russia’s side

NATO can reduce the threat of terrorism, but not liquidate it completely, said Latvian ambassador to NATO Indulis Berzins in an interview to Latvijas Radio before the upcoming NATO summit, which is expected to discuss the recent terrorist attack in Manchester, UK.

ECT: Most of Romania population sees domestic violence as normal

Romania has been criticised in a ruling by the European Court of Human Rights for being insufficiently committed to preventing domestic violence.

Latvia warned that budget deficit under tax reform may exceed allowed threshold

European Commission’s assessment of the effect from Latvia’s fiscal plan and intended tax reform show major risks of diversion from requirements of the Stability and Growth Pack for 2018.

British police names alleged Manchester terrorist

British police has named Salman Abedi as the possible suicide bomber, suspected of having killed 22 people and injured 59 in the city of Manchester this week.

Interest of Indian youth for study opportunities in Latvia increases year after year

Indian Foreign Affairs Minister Mobashar Jawed Akbar emphasized during his meeting with Latvian Foreign Affairs Minister Edgars Rinkevics that India has experienced very rapid economic growth in the past year. He added that the upcoming Latvian-Indian business forum will be an important step towards closer cooperation in economy.

Latvian government reduces administrative burden on amelioration

Latvian government has agreed to support Agriculture Ministry’s prepared amendments to requirements that dictate construction requirements for waterworks and amelioration systems, as well as cadastral rules. Changes were prepared to reduce administrative burden, Agriculture Ministry reports.

Survey: 32% of Latvian residents have no savings

Losing their income, 23% of respondents would not be able to cover everyday expenses, 5% would be able to maintain payments for less than a month and 20% of respondents would be able to cover a whole month’s worth of expenses, shows the survey performed by Nordea on personal finances.

Producer prices in April grew 0.1% in Latvia

Compared to March, the level of producer prices in Latvian industry grew by 0.1 % in April 2017. The prices of products sold on the domestic market increased by 0.5 %, whereas the prices of exported products dropped by 0.2 %.

LSBA: closure of gambling halls is an attempt by officials to promote their image for elections

Latvian Association of Gaming Business asks deputies of Riga City Council to reconsider their actions in relation to the planned decision to prohibit gambling halls in Riga’s historic centre.

More people have moved to Estonia than left it in 2016

13,792 people have emigrated from Estonia in 2016 and 14,822 have immigrated, Estonian statisticians have estimated, concluding that net migration in the Baltic country has been positive for the second consecutive year.

Saeima to discuss the role of the Security Department of the Bank of Latvia

Saeima’s Defence, Internal Affairs and Corruption Prevention Committee will visit the Bank of Latvia on Wednesday, 24 May, to discuss the role of the bank’s Security Department, as BNN was informed by Saeima’s press-service.

Razuks hints healthcare budget’s increase would require new fees

Sides involved in discussions about finding additional finances for healthcare have yet to reach a definite agreement. It is possible there may be a new fee introduced, said Saeima Public Health sub-committee chairman Romualds Razuks told Rīta panorama on Tuesday, 23 May.

Twelve million euros invested in creation of car wash network in Latvia

Wash & Drive opens the largest self-service car wash station in Riga. In cooperation with Citadele Bank, EUR 800,000 was invested in the creation of this seven-box car wash, as confirmed by the bank.

EC: Latvia’s tax system is less progressive than systems in other EU countries

The European Commission recommends Latvia to reduce the tax burden for small wage recipients and move it to other sources that are less impacting on growth and motivate people to pay taxes.

Latvia to lead joint air and land military exercises this year

Annual international military exercises Saber Strike will be taking place in Latvia from 3 – 15 June. Allied troops and armoured vehicles have begun arriving in Latvia for the upcoming exercises, as reported by Defence Ministry.

Tragic blast shakes Manchester, UK

In an explosion, which has occurred in a mass sports and music events venue in the British city of Manchester, 22 people have died and over 59 have suffered injuries.

Experts: Rail Baltica – connection that benefits everyone

The essence of Rail Baltica project is not combating the trends currently present in the world, but rather using them as an advantage, says advisor to the Bank of Latvia Andris Strazds. He adds that more and more economic and social development is centered in large and urban city centres.