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Wednesday 18.07.2018 | Name days: Rozālija, Roze
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Financial Times: Latvian parliamentary crisis worries investors

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When Latvia’s then-President Valdis Zatlers called for the Saeima dissolution, many perceived it as a political suicide. Two months have passed and Zatlers is now back in the political game, moreover, with a new party of his own, says analyst for Financial Times.

Baltic news, News from Latvia, BNN-NEWS.COM, BNN-NEWS.RUHowever, the self-proclaimed progressive return of the reformer is also accompanied by other processes that raise fear in investors, especially, due to Zatlers Reform Party and Harmony Center (Saskaņas Centrs), a pro-Russian party, both riding equally high in public polls.

«The key worry for investors is a shift to Harmony Centre, which would turn the focus back to Russia and where economic policies are certainly not in line with the IMF line of thinking,» says Peter Attard Montalto, Europe economist at Nomura.

Whoever it is to lead the new government, he/she will have to make real effort for Latvia to join the eurozone in 2014, Financial Times reports.

Shift to Harmony Centre is unlikely and Zatlers Reform Party could form a coalition together with Prime Minister Valdis Dombrovskis political association –  Unity (Vienotība). Such a government would still be investor-friendly, the expert says, adding that «Clearly such an arrangement would have to be accompanied by a cleansing of oligarch links and so on, for this to not damage Zatlers. Under such a coalition Dombrovskis would probably still have an important role and policy would be unlikely to change. Overall, despite criticism of previous governments and their links to oligarchs, Latvia has been investment friendly, pro-EU, putting in place sound economic policies and fiscal consolidation under the IMF package.»

Whereas Mujtaba Rahman of Eurasia Group points out «Zatler’s new party is made up of many new, untested, young professionals. So while there is lots of potential, there is also lots of skepticism regarding the impact the party could have.»


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