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Ceturtdiena 24.08.2017 | Name days: Boļeslavs, Bērtulis

Economic diary. People are what matters the most

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Baltic news, News from Latvia, BNN.LV, BNN-NEWS.COM, BNN-NEWS.RULatvia’s most precious economic resource is people. They are generally in a state of depression, do not have exceptionally good health and are not particularly well educated. These were the conclusions made by the World Economic Forum.

Talents needed…desperately

The World Economic Forum (WEF) is a Swiss non-government organization. This was the first time WEF decided to perform such a large-scale evaluation of human capital. As part of this research initiative, a special Human Capital Index was developed – a set of social and demographic factors aimed at helping researchers evaluate the value of a country’s population in economy.

Latvia’s most precious resource was evaluated as satisfactory. Latvia ranks 38th on the list consisting of 122 countries evaluated by WEF. Health quality, education and common skills of Latvia’s population is more or less on the level of Saudi Arabia, Chile and Italy. Lithuania is ahead of Latvia (34th place). Estonia, on the other hand, is ahead of both – 27th place.

Analysis of auxiliary factors shows that depression, weak health and low-quality education are some of the main problems of Latvia’s residents. “Investments in human capital are equally important for every individual and societies. This is doubly true when a population has a tendency to grow old and reduce in number. The lack of talents may become a serious problem for many developed and developing countries. Governments will need to consider the possible solutions for this problem in a short-term perspective and long-term development plans,” – authors warn.

Bank of Latvia = Rimsevics

There is at least one highly qualified worker in Latvia. It is the 48-year-old president of the Bank of Latvia Ilmars Rimsevics. He was recently proposed by parties of the coalition to remain for a third six-year term.

Mr Rimsevics, who has worked at the Bank of Latvia for nearly the whole of his career, can be proud. If he is re-elected to stay for a third term this December, he will become a member of the Board of Directors of the European Central Bank.

Mr Rimsevics took the post of president of the Bank of Latvia in 2001. He replaced Einars Repse, who decided to aim for the Saeima with his new party at the time. There were even speculations that he could become the President of Latvia in 2007. Two years ago, he was asked a question regarding his plans for the future. He replied that leaving the central bank while the country was in the process of getting back on its feet after the crisis would be irresponsible.

All 12 years of Rimsevics management over the country’s central bank did Latvia slowly progress toward euro. In order for Latvia to adopt euro as soon as possible, the decision was made to adopt the ERM 2 mechanism in 2005. In spite of the fact that the rules allowed for exchange rate fluctuations within 15%, the Bank of Latvia had decided to narrow it down to 1%.

“Party’s over, gentlemen”

Politicians managed to reach another compromise this week. It revolves around residence permit issue in exchange for investments in real estate. It is planned to reduce the number of approved applications next year.

In 2014, the Office of Citizenship and Migration Affairs will be allowed to approve only 800 applications from foreign buyers of Latvian real estate. This includes a maximum of 700 transactions worth EUR 150 thousand and EUR 100-500 thousand. In the following two years, this quota will be reduced by 175 every year.

Raivis Dzintars, co-chairman of the National Alliance, which demanded the limitation of the programme, told the press: “This is not an optimal solution, but it is the best possible one given this coalition.”

This “best solution” was not accepted by the business sector. Entrepreneurs believe this means the end for a more or less stable development of the market. Many current projects will not be finished; some of them will remain idle. The government will need to think how to employ the thousands of people who will likely lose their jobs. The state will also likely need a new economic safety pillow, because the budget will lose millions because of limitations to this programme. On top of that, many Latvian builders will likely leave the country once the projects they are working on fall idle.

Latvia gained more than LVL 460.5 million thanks to this programme since July 1, 2010. LVL 370.3 million of this amount was invested in real estate, LVL 66.6 million were transferred to banking deposits and LVL 23.5 million – base capitals of different companies.


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  1. JPR says:

    Rim service? Only in Latvia…

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