Latviski English По-русски
Sunday 25.03.2018 | Name days: Māra, Marita, Mārīte

Economic Diary of Latvia. Two favourite questions – what should be done and who is to blame

(No Ratings Yet)

Baltic news, News from Latvia, BNN.LV, BNN-NEWS.COM, BNN-NEWS.RUThis week, Latvia’s Parliament has finally concluded its work on amendments to the Immigration Law. This work continued for over a year. This law has been added with many new articles that cover the order for the issue of residence permits in exchange for investments.

Amendments will come into force on 1 July. This means new life for the people who already have residence permits and those wish to receive them.

First of all, deputies approved the norm that provides for the payment of EUR 5,000 for repeated extension of a residence permit issued for a five-year period. Certain groups of investors, however, will have to pay EUR 5,000 for the first extension. The majority of residence permit holder will have to make the first payment ten years from receiving the document.

The approved norm states that residence permit holders who were provided with permits in exchange for purchase of real estate before amendments of 2014 will not have to perform this payment initially. Thy will have to pay EUR 5,000 in order to extend their permit a second time.

Approved amendments do not change the norm previously supported by Saeima’s Defence, Internal Affairs and Corruption Prevention Committee that states how extension of residence permits issued in exchange for purchase of real estate property before amendments of 2014 will include the payment of EUR 5,000 for the first time.

Finances received from this redaction of the law will be added to the Economic Development programme.

Secondly, approved amendments also provide the Cabinet of Ministers the right to assess the influence of residence permit on state security and economic development and implement restrictions on the issue of permits to citizens of third countries for a period of time not longer than five years.

Thirdly, the law states that a foreign citizen will become eligible for the issue of a residence permit in exchange for purchase of no more than two real estate objects (except for empty land) outside of Riga, Jurmala, Adazi, Babite, Baldone, Carnikava, Garkalne, Ikskile, Kekava, Marupe, Olaine, Ropazi, Salaspils, Saulkrasti or Stopini worth no less than EUR 250,000.

The norm according to which foreigners are able to request residence permit issue in exchange for purchase of real estate property worth no less than EUR 250,000 remains in force.

Furthermore, a number of other amendments have been added to rules that govern the issue of residence permits in exchange for investments into capital associations. Including this one – a residence permit issued to a foreigner will be allowed to be revoked if the foreigner’s tax debt exceeds EUR 150,000.

As BNN had previously reported, demand for residence permits had dropped significantly after adoption of amendments to the Immigration Law. Foreigners who applied for residence permits had purchased 273 real estate objects. Compared with the number of real estate objects bought in 2014 (2,250), this result turned out 8.2 times smaller. It was 5.7 times smaller in comparison with 2013 (1,556); 3.7 times smaller in comparison with 2012 (1,013); 2.5 times smaller in comparison with 2011 (669). This also had an impact on the size of investments: in 2014 non-residents spent EUR 397.3 million on purchases of real estate property in Latvia and EUR 73.6 million in 2015.

The local market has become active. This market remained in deep stagnation during the best years of residence permit issue. According to information from Balsts, compared with May 2015, the number of apartment purchases has grown 23% in May 2016.

Growth slower than zero

According to estimates from Economy Ministry, average consumer price growth could be close to zero this year.

The ministry’s experts believe inflation will remain under influence from global oil and food prices in 2016. Following a significant decline of global prices in 2015 and the beginning of 2016, February market the beginning of their growth, which was caused by different short-term factors. This is why it is not expected that they may start growing rapidly in the near future.

Economy Ministry notes that price rise was more rapid than usual in May. During the pre-crisis period, reduction or slight increase of prices was usual for May. This year, however, May’s price growth remains the most rapid since 2008.

In May, when compared with April, consumer prices in Latvia have grown 0.6%.

Search for the guilty

Data concerning the level of grey economy in Latvia’s construction sector was published this week. This study was carried out by Business against shadow economy association and SSE Riga. As it turned out, interviewed representatives of construction companies view the applied measures to reduce grey economy in construction as insufficient, to say the least. The adoption of a reverse payment order for VAT was mentioned as the only positive example by representatives of the industry. According to them, it is the only measure that has had a positive effect on the decline of grey economy.

Arnis Sauka, SSE Riga associated professor and member of the board of BASE, mentioned during the presentation that the study offers a number of proposals to reduce the level of grey economy in the country’s construction sector – adoption of a minimum wage, refusal of the use of the lowest price criterion during procurements, development of model contracts, effective addition of construction entrepreneurs classification in public procurements and others.

As part of the study, expanded interviews were held with managers of 30 of Latvia’s largest construction companies, representative surveys of managers and leading specialists of 254 companies were held, experts of Latvia’s Chamber for Commerce and Industry were interviewed, as were experts of Latvia’s Employers’ Confederation and Construction State Bureau.

As previously reported, the proportion of envelope wages in Latvia’s construction sector is 36.3%, which is significantly higher than the average across the country – 17.9%.

Inara Petersone, the resigning head of the State Revenue Service, mentioned in an interview to Ir magazine that efforts to combat grey economy alone cannot hope to provide the state budget with EUR 500 million, or EUR 750 million and even EUR 1 billion. If the government remains in development of a new plan and coordination talks for said plan for two years, as much time will be necessary to realize the plan, Petersone said. She believes the development process of the next year’s budget will be very complicated. In addition, it will be followed up by a search for the guilty.


Leave a reply

MEP: operations of certain banks in Latvia ruin the country’s reputation

Money laundering is a problem in Latvia, because the activities performed by certain banks ruin the country’s reputation, said member of the European Parliament Krišjānis Kariņš in an interview to Rietumu Radio.

Harmony believes education only in Latvian language is discrimination

Members of Harmony’s Saeima faction have turned to President of Latvia Raimonds Vējonis with a request to halt the parliament’s newly approved amendments to the General Education Law and Education Law regarding education only in Latvian language.

Opinion: UFG and For Latvia and Ventspils were in favour of Vejonis congratulating Putin

Latvia’s President Raimonds Vējonis sent his congratulation to the newly-elected President of Russia Vladimir Putin in order to secure political capital for himself during next year’s presidential elections, says Assoc. Prof. Ojārs Skudra from Social Sciences Faculty of the University of Latvia.

Commissioner: Latvia should provide a clear response to situation in its financial sector

The scandal in Latvia’s financial sector has been reported far and wide in the European Union. This is why it is highly important for Latvia to provide a clear reaction to all this, said Vice-President of the European Commission for Financial Stability, Financial Services and Capital Market Union Valdis Dombrovskis.

Don't joke about bombs at Tallinn Airport, they take it seriously

Estonia's largest airport in Tallinn has from early 2017 received 14 threats of the presence of explosives in the air-travel hub, most of which have been discovered to be just jokes said at the wrong place.

Minister: learning in a single education system using state language is only obvious

Education using state language is our way of ensuring sustainable development of our nation, says Latvia’s Education and Science Minister Kārlis Šadurskis.

Estonian banks close foreigner accounts in wake of ABLV closure

In the wake of the closure of ABLV Bank in Latvia and alleged money laundering via the Estonian branch of Danske Bank, lenders in Estonia are closing the accounts of foreigners, but this threatens the country's successful e-Residency programme aimed at attracting foreign investors.

Latvian Saeima conceptually supports limiting the Bank of Latvia governor’s authority

The Saeima has supported amendments to the Law on the Bank of Latvia in the first reading. Amendments provide that the term of the bank’s governor, his deputy and council members will be five years, as reported by Saeima’s press-service.

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.

Newest comments