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Wednesday 18.07.2018 | Name days: Rozālija, Roze
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Guarantee Agency: state development authority must be an agency

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Ivars Golsts

To escape extra costs associated with banking activities, the future state development authority must be an agency, not a bank, says Ivars Golsts, head of the Latvian Guarantee Agency.

In spring 2011, the Finance Ministry came up with its proposal to merge Hipotēku banka (Latvian Mortgage and Land Bank), the Rural Development Programme and the Environmental Investment Programme to establish a single financial development institution. Golsts points out that Latvia needs a single development institution that deals with a variety of financial instruments. In his view, it is logical to combine all the functions handled by the State Guarantee Agency, the Mortgage Bank’s development department, Rural Development Programme and other institutions.

“But we must think of what form this new body will take. Shall it be a compact agency with a professional team of individuals, where some 12 people manage about 150-200 million euro (105-140 million LVL) portfolio or shall it have a large central body with 200-300 people, a large office and a branch network in the regions?”

“The development agency must be compact, with a small number of professionals who manage a portfolio of financial instruments for development boost. If the government wishes to achieve a political objective and this needs financial instruments, for example, a loan, it is possible via a development bank or an agency which organizes tenders and concludes contracts with banks. Banks then deal with crediting,” Golsts adds.

In his view, establishment of such an agency should be gradual.

He also stresses that the Guarantee Agency already manages instruments that will make up the basis of the new institution’s work,” he says.

Ref: 102.105.105.982


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