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Saturday 17.03.2018 | Name days: Ģertrūde, Gerda, Gertrūde

Rimsevics hopes Latvia has learnt its lesson

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The Bank of Latvia President Ilmars Rimsevics

The Bank of Latvia President Ilmars Rimsevics (Ilmārs Rimšēvičs) hopes that Latvia has learnt to live in accordance with its means, because, in order to acquire a sustainable economy, the state expenditure must not exceed the revenues.

At the 11th Baltic Economic Forum, when analyzing the Latvia, Lithuania and Estonia’s economy of the previous year, Rimsevics pointed out that there have been many mistakes which resulted in the current situation in the Baltic States, especially in Latvia, informs

As regards Latvia, he criticised the former governments’ unwillingness or inability to achieve the budget surplus, instead, every year living beyond their means. The criticism was also aimed at the rapid salary increase, which was not in line with the climb in productivity. As a result, the country’s competitiveness suffered greatly.

According to the President of the Bank of Latvia, certain actions were necessary to put on the brakes to the construction industry, which had quickly overheated the economy, and hence, at least partly temper the rapid economic downturn.

Rimsevics mostly commended Estonia by expressing his appreciation to the Estonian government officials, whose perceptive and pragmatic strategy, during the pre-crisis years, when creating the budget surplus, allowed the Estonians to overcome the recession better and enabled the introduction of the euro already starting from 2011. As far as he is concerned, the Estonian government has provided the Estonians with more favourable living conditions.

Likewise to Rimsevics’ other public presentations, this time he also pointed out that only budget deficit reduction can help the Latvian economy to return to the path of sustainable growth.

«The budget deficit of 6% is not a magical number, but it could also be lowered to reduce the interest rates, to attract investment and to lead Latvia closer to the euro introduction in 2014,» said Rimsevics. He added that the budget consolidation is not an easy task, but realistic, and to facilitate its implementation certain ambitions are required.

It was also stressed that, at the present moment, the planning of the country’s next annual budget, in a way that the taxes would not have to be raised, is the most topical matter in Latvia. Rimsevics is of the opinion that all investment and business plans could be ruined if the taxes are raised starting from the next year. Therefore, the business environment currently has only one task – to request that the politicians dot not increase taxes.

The bank’s president concluded his speech by reminding that the Estonian President Toomas Hendrik Ilves, during his visit in Latvia, said that there should be no illusions that we can spend the money that we do not own. It is not possible neither for the inhabitants, nor for the government. Ilves emphasized that both Latvia and Estonia have to find the ways to reduce the expenditure. This choice has to be made right now, and should not be passed on to the future generations.

Today and tomorrow, September 24, the 11th Baltic Economic Forum is taking place in Riga, it invites participants not only from the Baltic States, but also from Belarus, Russia, Sweden, France, Denmark, the Netherlands, etc.

This year, it is planned that entrepreneurs, politicians and experts will hold discussions during the forum on the gained experience of the Baltic States after overcoming the global economic and financial crisis, on the opportunities and challenges of the promotion of the region’s competitiveness within the framework of the European Union (EU) Strategy for Baltic Sea Region.

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