By Nina Kolyako (January 31, 2012)
February 1, 2012 marks 100 days of the third government headed by Prime Minister of Latvia Valdis Dombrovskis. As Paul Krugman – the Nobel Prize laureate and the US economist remarked, Latvia is the only country that has managed to regain confidence of international markets.
He also says that Latvia continues to progress toward big goals and sees its place in the core of the European countries to create a stable foundation for economic development and well-being of the population in the future, reported BC press Secretary to the Prime Minister a?rtins Panke.
”The most important task during the first 100 days of the government has been successfully accomplished – by adopting the state budget 2012 and concluding the international loan program Latvia has concluded three-year-long consolidation and regained its financial autonomy. This success will allow the government in its further work to focus more on other three priorities of the Government Declaration – building of inclusive society, strengthening of the rule of law and promotion of the numerical growth of the Latvian nation,” said Prime Minister Valdis Dombrovskis.
One of the most significant tasks to enhance the development of Latvia and strengthen competitiveness will be drafting of a qualitative National Development Plan for 2014 –2020. Already this year the development priorities of Latvia will be set in the plan, a direction of horizontal action for cross-sectoral issues will be provided as well as key measures with specific deadlines and funding sources will be identified.
Conclusion of the international loan program should be mentioned as the most significant work of the government in 2011. It was achieved through continuous purposeful reduction of expenditures and implementation of reforms in public administration. The Latvian economy has revived and the population of Latvia starts enjoying the fruits of the hard work. In 2011, the number of job seekers has decreased by 38.3 thousand or by 17%, the industrial output growth rate of Latvia is one of the highest in the European Union, exports have reached the pre-crisis level while industrial output is close to that level.
Prime Minister Valdis Dombrovskis: “At a time, when credit ratings of many European countries are reduced, Latvia’s accomplishments in restoring the financial stability are praised. The improvement in Latvia’s credit rating made by credit rating agency R&I and increase in Latvia’s GDP growth forecast up to 2.6% made by the EBRD give additional confidence to both, the financial markets and Latvia about correctness of the chosen fiscal discipline tactics. Currently, the residents of Latvia can feel much more secure about their future than residents of many other EU countries.
Similarly, Latvia has expressed its clear commitment to closer cooperation within the EU by supporting more strict fiscal discipline to ensure that in 2014, when Latvia plans to join the euro area, it is sound and stable. Maintaining proactive policy, Latvia, the Baltic and Nordic region in the coming years will become one of the most stable and dynamic regions in Europe.”
Within the framework of the international loan program, Latvia has provided a basis for implementation of sustainable fiscal discipline and further a counter-cyclical fiscal policy will be implemented in Latvia, which means that during the upswing phase of the economic cycle a restrictive fiscal policy will be implemented, while during the downturn phase – a fiscal policy stimulating economic development.
However, in order to ensure growth of Latvia, it is necessary to continue improving the business environment. Already now the positive impact of the implemented measures has been confirmed internationally – according to the World Bank’s Doing Business 2012 data, Latvia ranks among those countries where the implemented reforms have facilitated business conduct.
Business start-up has been improved by introducing a possibility to register companies with reduced fixed capital and by providing the opportunity to submit an application for registration in the VAT payers’ register together with an application for inclusion of a merchant in a commercial register. At the same time, Latvia is among those 29 countries, which, through challenges of economic crisis, have managed to radically improve the regulation of insolvency issues. In addition, the registration of the real estate has been facilitated and the electricity connection process has been improved.
The Latvian government aims to continue work to ensure balanced, sustainable and dynamic development of the Latvian economy. For example, modern industrial policy guidelines have already been developed aiming at higher industrialization of the country and diversified export by creating products and services of higher valued-added, new and better paid jobs. By 2020, it is planned to increase the manufacturing share in the total added value from current 14.2% to 20% by the help of industrial policy.
Within the last 100 days of the Latvian government, Latvia’s position regarding planning of the next EU financial framework in the area of cohesion and the interests of Latvian farmers were actively defended to ensure that the Latvian farmers receive fair and equitable direct payments in the next EU planning period for 2014-2020 and to provide that the cohesion funding is maintained at the same level. The year 2012 will be decisive for Latvia in its aim to ensure that the levels of direct support in the EU converge according to the principles of fairness and equitability, moreover starting already from 2014.
The government has also planned a series of measures to promote cooperation with the diaspora abroad with a view to develop medical and cultural tourism, to improve transport infrastructure and other areas.