bnn.lv Latviski   bnn-news.com English   bnn-news.ru По-русски
Tuesday 25.09.2018 | Name days: Rauls, Rodrigo
LatviaLatvia

Economic Diary of Latvia. An interesting turn of events

FaceBook
Twitter
Draugiem
print
(No Ratings Yet)

Baltic news, News from Latvia, BNN.LV, BNN-NEWS.COM, BNN-NEWS.RULatvian parliamentary budget committee has finally approved the state budget plan for 2016 this week. This means deputies of the Saeima’s profile committee have given the main budget document a high grade. Unfortunately, Ilmars Rimsevics, Governor of the Bank of Latvia, does not share the government’s optimism.

Rimsevics believes the budget plan requires some significant improvements. The main one at that is the reduction of expenses. According to Rimsevics, the budget has not right to have deficit, as unnecessary expenses only service to put future generations in debt. «We pay in the form of interest that could have been invested in business development,» – said the governor of the Bank of Latvia.

Rimsevics is certain that it is necessary to carry out in in-depth evaluation of the state budget and develop a ‘zero budget’. Instead, however, the government decides to increase revenue at the expense of increasing taxes, which makes the country’s economy less competitive. Furthermore, constant tax changes undermine the trust of investors and take away their plans to invest money, added Rimsevics.

Rimsevics believes Latvia’s debt is relatively big for such a small economy. The only way to overcome the crisis with a debt of such size is by sorting out the country’s finances.

What is interesting is that, according to information from the State Treasury, the situation is not as dramatic. Yes, the total size of Latvia’s debt has increased: from EUR 8.2 billion in Q2 2015 to EUR 8.65 billion in Q3 2015. According to information from the Central Statistical Bureau of Latvia, there were 1,976,500 people living in Latvia in October. With that, the debt per capita is EUR 4,330 (EUR 4,148 in the previous quarter of the year). Unpleasant to be sure, but, considering the amounts some people owe to banks already, this debt seems laughable.

The debt is not as scary as people say

In addition, according to information from Eurostat, Latvia’s state debt was 35.3% of GDP at the end of Q2 2015. It is the fourth lowest index across EU member states, where the average level of state debt is around 90%. State debt situation is only better in Estonia (9.9% of GDP), Luxembourg (12.9%) and Bulgaria (28.3%). Lithuania’s state debt is equal to 37.6% of GDP.

As previously reported by BNN, the state budget for 2016 provides for revenue worth EUR 7.37 billion and expenses – EUR 7.65 billion. Compared with 2015, budget revenue is expected to grow EUR 114.2 million and expenses – EUR 183.2 million.

According to the budget plan, maximum state debt volume must not exceed EUR 10.1 billion at the end of 2016. The GDP itself is expected to reach EUR 26.13 billion and the allowed budget deficit – 1% of GDP.

Something about liberalization

It has become known this week that Lithuania plans to sell a test-shipment of gas to Latvia in 2015. Litgas has provided its offer to Latvenergo. As confirmed by Litgas CEO Dominikas Tuckus, the test-shipment may be as big as one or several million m3 of gas. Latvenergo will be able to procure gas from Lithuania thanks to rules of use of natural gas infrastructure approved by the Public Utilities Commission on 10 September.

Latvian Economy Minister Dana Reizniece-Ozola has mentioned this week that there is no time for delays with gas market liberalization plans. Among other things, she accused the local monopoly -Latvijas gaze – of blackmail. She also said because Latvia currently receives supplies of natural gas from a single source (Gazprom), there is no choice. With that, Latvian consumers pay 10% more for gas.

In order to create a competitive environment on the gas market, Reizniece-Ozola signed a cooperation memorandum with Lithuanian Energy Minister Rokas Masulis in order to diversify supplies of natural gas and develop an open market. The topic of supplies using Klaipeda LNG Terminal was also mentioned. As mentioned by Reizniece-Ozola, having multiple sources for supplies of natural gas will not only increase the security potential in case of crisis but will also help increase the country’s energy independence.

According to unofficial data, Litgas intends to sell gas bought by Lietuvos duju tiekimas from Gazprom. Liquefied natural gas sold by this company currently costs nearly EUR 33 MW/h, while Gazprom’s fuel costs around EUR 20-21 MW/h.

Ref: 017.109.109.4849


Leave a reply

PHOTO: Pope Francis visits Riga Cathedral and meets seniors at St Jacob’s Cathedral

Pope Francis visited both Riga Castle and Riga Cathedral, where a service was held under his supervision. There he met with different Latvian officials. After that, the pope met with senior citizens at St Jacob’s cathedral.

Pope Francis arrives in Latvia for an official visit

Pope Francis arrived in Latvia on Monday, 24 September. He was greeted at the airport by President Raimonds Vējonis, Archbishop Zbigņevs Stankevičs and other public figures.

Week in Lithuania. President proposes amendments to restrict bailiffs' remuneration

Lithuanian President Dalia Grybauskaitė is putting forward amendments aimed at restricting bailiffs' financial remuneration to up to 15 per cent of the amount recovered.

BNN summary of the week: pre-election heat, rule of law in Latvia, Baltics prepare for Pope’s visit

BNN offers a summary of this week’s topical news in a variety of categories: Elections; Change; Stagnation; Fight; Visit; Investigation.

Court reschedules viewing of criminal case due to Non-citizens Congress leader’s poor health

Riga City Vidzeme Suburb Court announced today that the viewing of the criminal case in which leader of Non-citizens Congress Aleksandrs Gapoņenko is accused of inciting national hate will be postponed to a later date.

Producer prices in industry up 1.0% in Latvia in August

Compared to July, level of producer prices in the Latvian industry rose by 1.0 % in August 2018. Level of prices of products sold on the domestic market grew by 1.9 %, but of exported products – went up by 0.1 %.

Bishop: priest suspected of sexual abuse to be operated on in hospital

Pāvels Zeiļa, who is a priest of Rezekne Aglona diocese and the suspect in the criminal case regarding sexual violence and human trafficking, will undergo a complicated surgery on Friday, 21 September, as reported by Bishop Jānis Bulis.

Study: residents withdraw money from ATMs less often but in larger amounts

Every now and then discussions about dropping cash money altogether become active in society, AS PrivatBank representatives say.

HND Grupa design company, involved in Zolitude tragery, declared insolvent

Building engineer Ivars Sergets company HND Grupa, which was involved in the case revolving around the Maxima supermarket that collapsed in Zolitude, killing 54, not five years ago, has been declared insolvent, as reported by Latvijas Avīze.

Deputy Chief of State Fire and Rescue Service suspected of misappropriation

Latvia’s Interior Affairs Ministry’s Internal Security Bureau has detained deputy chief of State Fire and Rescue Service Ints Sēlis and one other official – a senior inspector, as reported by Panorāma programme of LTV.

Washington sanctions China for buying Russian military equipment

U.S. government has introduces sanctions against the Chinese army over a purchase of fighter jets and missile systems from Russia, despite a U.S. sanctions law targeting Moscow for attempts to sway in the 2016 U.S. election.

Autumn expected to begin soon in Latvia

Friday, 21 September, is expected to be warm in Latvia. Sun and considerable amount of clouds are expected, but not precipitation. Wind will draw in from the south, reaching a speed of 15-17 m/sec in western and central regions, as reported by Latvia’s Environment, Geology and Meteorology Centre.

Brexit: a finish line with no end in sight

Less than 200 days are left before Britain officially leaves the European Union. The state of the agreement between Britain and EU only serves to create more chaos, from which neither Britain nor EU, or even Latvia will benefit.

EU underlines to London: No-deal Brexit also option

European Union's top officials and member state leaders planned to push for a Brexit deal in October, while urging London to give ground on the issues trade and the Irish border by November, to avoid a no-deal Brexit.

Lithuanian PM, a presumable presidential hopeful, set to curb grocery price growth

Having chastised food retailers on many occasions for high grocery prices, Saulius Skvernelis, the Lithuanian Prime Minister, stepped forward in the bid to harness local supermarkets. The presumed presidential candidate of the ruling Farmers and Greens (LVŽS) has summoned this week executives of major retail food chains, scolded them and reaffirmed his pledge to rein in the edging up prices.

Industrial prices in Estonia – up by 3.4% on year

The industrial price index in Estonia has risen from August 2017 to August this year by 3.4%, official statistics show.

Latvian parliament approves transition to competence-based approach in education content

On Thursday, 20 September, Latvia’s Saeima approved in the final reading amendments to the Education Law, necessary for the gradual introduction of competence-based approach in education materials.

Latvian Saeima wants to disallow shareholders to work in company management board

On Thursday, 20 September, Saeima approved in the first reading amendments to the Credit Institutions Law that provide for multiple measures to enhance Latvia’s finance system and its long-term stability, as reported by the parliament’s press-service.

Aglone Council prohibits residents from organizing protests during Pope Francis’ visit

A protest against the Catholic Church’s ban on abortions and expression of shock in relation to the recent sex scandals involving Catholic priests was planned to take place in Aglone during Pope Francis’ visit, but the city council decided to disallow them.

Latvian parliament conceptual supports pension bonus indexation

On Thursday, 20 September, Saeima supported in the first reading several initiatives for a more rapid pension climb for several groups of pensioners, as reported by Saeima press-service.

Majority Saeima deputies support open president vote; UGF members fail to decide unanimously

On Thursday, 20 September, amendments to the Constitution regarding open election of the state president were approved in the second reading.

Four Estonian parties have strong support, enough to enter Riigikogu

Four Estonian parties are believed to currently have enough support to enter the Estonian parliament, a broad opinion poll showed, as leading parties compete for voter backing.

Vitol Group concerned over state of rule of law in Latvia; turns to state officials

One of the largest energy resource traders in the world – Vitol Group – has sent a letter to Latvia’s highest ranking officials, expressing deep concern over the rule of law and application of legislative acts in the litigation between LatRosTrans and Polocktransneft Druzba over the EUR 66 million worth technological oil.

As Pope heads to Baltics, more attention to Catholic sex abuse

The time, when Roman Catholic Pope Francis is set to visit the Baltics, greatly differs from the visit by Saint John Paul II in 1993. There is public resentment over the countries spending several million euros to host the trip of the pontiff and the Catholic sex abuse scandals are topic of discussion.

Officials asked to take responsibility for misuse of state resources

If misuse of state resources takes place, officials have to take responsibility and pay for the damages caused to the state, says Public Expenditure and Audit Committee chairman Andris Bērziņš.

Newest comments