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Monday 15.10.2018 | Name days: Hedviga, Helvijs, Eda

Economic Diary of Latvia. Two scandals and both of them smell

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Baltic news, News from Latvia, BNN.LV, BNN-NEWS.COM, BNN-NEWS.RUAnother fumble involving sprats had taken place this week. This time, however, the story does not revolve around someone’s ban on sprats: local producers have accused the Latvian Foreign Ministry of ruining plans to supply Latvian sprats to China.

As it turns out, the first batch of Latvian sprats was supposed to leave for China in January. This has still not happened. Producers not only suspect foul play, but also accuse the Foreign Ministry of it.

«We don’t know who exactly in the ministry or embassy is responsible for this. But we do know that the trade agreement between Latvia and China has not been extended. Fish processing companies have managed to find an export market on their own in a difficult situation. The only thing that was remaining on the government’s side was to handle the technical details, but even this was has not been done. We have the appropriate certificate. What we don’t have is an extended agreement. This is not normal if the government hopes to receive taxes from exports,» – said the President of Latvian Fish Processing Companies Union Didzis Smits.

Manager of Brīvais vilnis company Arnolds Babris adds to the heat by saying that his company had plans to send five containers of sprats to China every month. The cost of a single container is EUR 50,000. With that, the company’s losses are estimated at EUR 250,000. «The goods were prepared to be sent. Unfortunately, now we’re forced to sell it elsewhere and at a lower price,» – said Babris.

The Foreign Minister responded to complaints one day alter. The ministry’s representative Ivars Lasis claimed Latvia and China have multiple agreements, but there is no agreement in regard to fish trade. All matters that revolve around exports of food products and their certification are handled by the Food and Veterinary Service and Agriculture Ministry, he added.

The two aforementioned institutions became active in this matter immediately after Foreign Ministry’s statements. According to the head of FVS Maris Balodis, China has changed rules that govern imports of fish products and the previous redaction of the agreement of 2004. He adds that FVS had only just received the new version of regulations from the Chinese embassy. Nevertheless, it has been filled and sent to Chinese institutions for approval.

Gazprom stands accused

Another story of international scale has taken place in the gas supply sector this week. The European Commission has sent complaints to the Russian Gazprom concern regarding alleged abuse of monopoly on the gas market in Central and Eastern Europe.

According to EC, Gazprom has breached Europe’s anti-monopoly regulations by intentionally dividing gas markets of Central and Eastern Europe. In particular, Gazprom is accused of limiting consumers’ rights to re-sell gas to other European countries. Such a practice allows the company in a position of a monopoly to set unfair prices on European markets, as mentioned in EC’s press-release.

Accusations raised by EC apply to Gazprom’s activities in eight countries – Bulgaria, Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland and Slovakia.

Representatives of Gazprom claim the find complaints from the European Commission unjustified.

Latvian Prime Minister Laimdota Straujuma claims Gazprom will no longer be able to gamble in Latvia after EC’s report on abuse of monopoly. Nevertheless, she adds that Latvia has gas reserves for the event of an emergency.

Ukraine also wants to join the EC in terms of this initiative against Gazprom. According to Ukrainian Prime Minister Arseniy Yatsenyuk, the country plans to turn to its partners in Europe to hold a joint investigation of Gazprom’s monopoly in Ukraine and Europe. He believes Gazprom operates on non-competitive terms, which causes damage to Ukraine’s economy.

With that, it is worth mentioning that Laimdota Straujuma and Arseniy Yatsenyuk will meet in Kyiv next week.

Dreaming of working in the government sector

While high-rank officials are busy solving complicated matters, Latvians dream of working in the government. This is shown by results of a survey carried out by SKDS. 51.2% of respondents have admitted wanting to work in the government sector. They believe people there have the most stable wages and social guarantees. In 2011, 58.3% of respondents expressed the desire to work in the government sector. In 2012, this proportion was 49.6%. 31.6% of respondents expressed the desire to work in the private sector.

With that, data compiled by the Capital Market Commission shows that Latvians are not as bad off as many describe it. Last year, savings of Latvian households had increased by nearly EUR 1 billion – reaching EUR 8.1 billion. Most of this money is stored in deposits: EUR 5 billion, followed by state pension plans (EUR 241 million), bonds (EUR 193 million), shares (EUR 177 million) and deposits in different savings and loan societies (EUR 15 million).

As noted by the commission, the gradual reduction of loan burden, Latvia’s economic development, low inflation and rise of wages have allowed people to make savings more often. This trend has finally returned in 2013 after years of stagnation.


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