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Sunday 23.09.2018 | Name days: Vanda, Veneranda, Venija
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Prime Minister: situation to improve after 2012

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Baltic news, News from Latvia, BNN.LV, BNN-NEWS.COM, BNN-NEWS.RU, Valdis Dombrovskis

Valdis Dombrovskis

2012 will be the last year of fiscal consolidation. Afterwards, there will be no necessity to raise taxes or reduce expenditure, because we will have reduced the budget deficit within the limits of Maastricht criterion and will have settled our state finances, the Prime Minister Valdis Dombrovskis indicates.

The situation in the economy is twofold – on the one hand, we are certainly exiting the crisis. Compared to the previous quarter, the economic growth has been observed since early 2010. These trends are also ongoing in 2011. More importantly, the economic growth is not only resuming, but significant changes in the economic structure are taking place. Before the crisis, the economy was based on a «bubble», real estate speculations and other unstable domestic consumption; however, now the production and export is the key driving force, Latvijas Avīze cites Dombrovskis.

The Prime Minister admits that the question on whether it is appropriate to raise taxes during the crisis is much broader. Of course, one can say it is not right, but the problem is that the state did not balance the budget during the upturn, thus it has created a surplus. Therefore, during the crisis the budget deficit is very large, so it is necessary to raise taxes and cut spending, even though neither one is improving the situation.

Asked when Latvia will finally have a balanced budget, the Prime Minister points out that there have been several attempts to take this direction. Also, at the time when I was the Finance Minister we carried out the budget base cost reduction of 6%, yet we faced a considerable lack of understanding from both the coalition partners and the society, confused why austerity measures are introduced when the economy is growing. However, we believe that exactly when there is an economic upturn, the budget deficit should be reduced and transferred to the budget with surplus. This was the direction we took – a balanced budget already in 2005. Latvia will not attain a balanced budget sooner than in 2015, Dombrovskis considers.


Leave a reply

  1. Verner says:

    Of course the government will stop after they have raised every tax and cut all the funds…

  2. Meri says:

    To day worst than yesteday but better than to morrow

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