Mrs Vaira Vike-Freiberga
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After a brief period of independence between the two World Wars, Latvia was annexed by the USSR in 1940. It reestablished its independence in 1991 following
the breakup of the Soviet Union. Although the last Russian troops left in 1994, the status of the Russian minority (some 30% of the population) remains of
concern to Moscow. Latvia continues to revamp its economy for eventual integration into various Western European political and economic institutions.
Update No: 259 - (25/07/02)
The Latvians are in deep negotiations to enter both NATO and the EU, with profound repercussions for their polity and economy. A summit of
would-be NATO members, among which the Baltic states are frontrunners, opened in Riga, the Latvian capital on July 5th.
Present was Senator Trent Lott, the Republican leader in the US's upper chamber. He offered the candidate countries optimistic words but also a caution.
Since 9:11 the US had realised the need to find allies, great and small, in the fight against terrorism. But he also told the 10 candidate states that they
needed to address certain problems inherited from the past, such as corruption, anti-Semitism and suppression of the press. "For the promise to be fulfilled,
the ancient maladies need to be eliminated."
Latvia might not seem such a great prize for NATO, with barely 5,000 military personnel. But it has a new radar station next to Riga Airport, whose screens
display a growing panorama of the region's airspace. It will become NATO's new eyes on the entire Baltic region and Northern Russia.
The significance of NATO membership for Latvia itself is manifold. Its primary implication is that it gives the local Russians, who number one third of the
population and predominate in the six largest cities, that Latvia is never going to get closer again to Russia. Therefore, they should integrate, becoming
full Latvian citizens. To do that they need to learn Latvian and forget about the glory days of Russian dominance in the country, joining the post-imperial
future. At the moment more than half a million residents, one fifth of the population, are not citizens, nearly all Russians.
The entry into the EU is billed for 2004 and is also likely to have a profound impact. The government has negotiated completion of nearly all the chapters of
l'acquis communitaire with Brussels. But it is baulking at the low quotas and subsidies for the first ten years of membership on which the EU is insistent.
If there is to be any easing here it will have to be negotiated by Poland.
The prospect of EU entry is having one unfortunate consequence. Latvia is now saddled with a new right-wing political force, both Eurosceptic and alarmed at
a possible influx of immigrants. Freedom Party is in the tradition of movements such as the Danish People's Party and the Dutch Fortuyn List.
State TV has banned a party commercial that gives a portrayal of a black man in the uniform of the pre-war Latvian military, standing in front of Riga's
Freedom Monument and kissing a local girl. "Today he is guarding Latvia," the caption goes. "Tomorrow he could be your son-in-law."
The political establishment has rounded on the campaign, dismissing the party as racist and fringe fanatics with no hope. But this is not so certain. A
small country, Latvia is understandably nervous about foreign interlopers, given its history. There is another party founded earlier this year by Einars
Repse, for long central bank chief, the architect of Latvian reform, which has brought annual growth of over 5% of GDP of late. The respective fates of the
two parties will provide a good measure of Latvia's destiny itself.
Latvian farmers get access to cheap loans for land purchases
Latvian farmers will shortly have access to cheap loans for buying agricultural land, following an agreement signed between Agriculture Minister, Atis
Slakteris, and Latvijas Hipoteku un Zemes Banka (Latvia's Mortgage and Land Bank), BNS News Agency has reported.
The programme is aimed at promoting the agricultural land market, offering long-term funding sources for buying land and expects to grant subsidies for loans
taken for buying agricultural land, reducing banking interest rates to at least 4 per cent annually.
The programme is set to get 1.5m lats (2.5m euros) this year alone, meaning that some 10 to 11 thousand hectares of land could be bought with the loans by
Latvian farmers this year. The loans, offered on terms quite similar to those in other countries, are to be issued for between 15 and 25 years.
Agriculture Minister Slakteris said he was pleased with the deal, adding that the low interest rates have been achieved with the funding from Hipoteku Banka
and money saved from agricultural subsidies by the ministry.
The Hipoteku Banka is the only entirely state-owned commercial bank in Latvia.
Private sector share increases to 69 per cent of Latvian economy
The proportion of private sector in the total added value has grown from 59 per cent in 1996 to 69 per cent last year, according to an Economics Ministry
report on Latvia's economic development, LETA News Agency has reported.
The extracting and processing industries show the largest proportion of the private sector, as well as construction and trade. These sectors are almost fully
controlled by the private sector. According to the report, 72 per cent of Latvia's eligible workforce is employed in the private sector.
The figures mentioned in the report are compared to the privatisation results in Lithuania, Bulgaria, Romania and Slovakia. In Lithuania, 71 per cent of added
value is created in the private sector, and the sector employs 69 per cent of the eligible workforce; in Bulgaria, the figures are 73 per cent and 68 per cent
respectively, in Romania - 61 per cent and 58 per cent, in Slovakia - 75 per cent and 68 per cent.
Latvian Economics Ministry predicts continued economic growth
Despite negative global economic development trends, the Ministry of Economics is not revising its forecast for Latvia's economic development pace this
As in December 2001, experts from the Economics Ministry predict a GDP growth of 5 per cent this year, according to an annual report on the development of
Latvia's economy. According to the Economics Ministry, consumer prices this year could increase 2.5 per cent, the unemployment rate will decrease down to
7.6 per cent, the national debt will climb up to 16 per cent of GDP, the foreign trade balance will improve up to minus 16.5 per cent, and current account
payment balance to minus 8.5 per cent. Last year, GDP increased to 7.7 per cent, inflation stood at 2.5 per cent, the unemployment rate decreased to 7.7 per
cent, the national debt increased up to 15 per cent of GDP, the foreign trade balance deteriorated to minus 17.9 per cent, the current account payment balance
was minus 10.1 per cent. The report on Latvian economic development is an informative analytical bulletin evaluating the national economic situation, the
course of reforms, and forecasting future development. The report is been issued twice a year...
IMF says Latvia among best EU candidates
The International Monetary Fund (IMF) has recognized Latvia as one of the best European Union candidate countries, BNS News Agency has reported quoting the
Latvian Finance Ministry.
The IMF board of executive directors issued the respective evaluation of Latvia after it considered a report on cooperation with Latvia, its development and
the implementation of commitments under the cooperation memorandum between the Latvian government and the IMF.
The IMF said Latvia has made progress in its macroeconomic development over the past two years, promoted by a stable economy and the implementation of
structural policy. It also noted its low inflation and the successful peg of the currency to the SDR [Special Drawing Rights] basket [of currencies].
The IMF praised Latvia's semi-annual budget implementation indicators with its national budget going without fiscal deficit in the first half of the year and,
possibly, even with some fiscal surplus. The Latvian government has made meaningful steps towards creating a legal structure to fight against money
laundering, the IMF noted. It praised the strengthening of the anticorruption system in Latvia.
The IMF said the only economic indicator posing risks to Latvia's economic stability is its current account deficit. It noted that Latvia should strengthen
supervision over borrowings by the local authorities, to ensure safe control over finances and contain its budget deficit at a low level.
"This is high praise for our achievements, which are rapid economic development in spite of slow growth in the world, and stable financial and monetary
policy," Latvian Finance Minister Gundars Berzins has said.
He said he supported the conclusion by the IMF about strengthening supervision over borrowing by the local authorities. He said parliament wanted to do it
through respective amendments to the law on local authority budgets. At present, these amendments have been returned to parliament for a review by the
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