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LATVIA


 

 

Key Economic Data 
 
  2003 2002 2001 Ranking(2003)
GDP
Millions of US $ 9,671 8,406 7,500 94
         
GNI per capita
 US $ 4,070 3,480 3,230 79
Ranking is given out of 208 nations - (data from the World Bank)

Books on Latvia




Update No: 314 - (22/02/07)

The Baltic tiger ride
Latvia is basically doing phenomenally well with the fastest-growing economy in Europe, GDP rising 12% last year. 
But it is still embroiled with Russia. Russians amount to one third of the population and predominate in the six largest cities.
A new coalition government, formed on February 6th, has taken on the mayor of the largest of them, the capital, Riga, and wants his dismissal. Latvia has a new coalition government from time to time, which nevertheless always carry on their predecessors' policies underpinning the growth effort.

Latvia's economic growth hits 12 per cent in 2006
Latvia's economy continued to surge last year, with gross domestic product growth hitting 11.9 per cent, government officials said on February 9th. The achievement was likely the best in the European Union, which the Baltic country joined in 2004.
Latvia's economy, traditionally the poorest in the bloc based on GDP per capita, has been expanding rapidly for several years because of strong growth in the retail, construction, real estate and telecommunication sectors. But economists, including those at the country's central bank, have warned of possible overheating. Many say that strong consumer demand endangers the country's ability to produce enough which threatens a widening current account deficit. 
But the government appears satisfied. "I'm gratified that competitiveness of Latvia's businessmen is growing" Economy Minister, Jurijs Strods, told the Baltic News Service. "Step by step we are moving toward Latvia's national ... goals to continue economic growth and increase the level of employment.
However, high inflation continues to plague Latvia, with recent figures showing that in January it amounted to more than 7 per cent, one of the highest rates in the EU.

The Riga-Moscow fracas
Until recently, border talks were stalled between Latvia and Russia. 
A Latvian-Russian border treaty dating back to 1997 remains unsigned and un-ratified because Latvian politicians sought to link the border settlement to a declaration from Russia admitting Soviet aggression during World War II, as well as concessions on other issues. 
Latvia included a unilateral explanatory declaration to the draft border treaty, which allows it to claim Russian territory - the Pytalovo District in the Pskov Region - that was part of Latvia before World War II and was annexed by Russia in 1944. In 2005 Russia refused to sign the border treaty with Latvia, since the Latvian government wished to add to the treaty a declaration containing a reference to the 1920 Latvian-Russian Peace Treaty under which the Abrene county (now Pytalovo) belongs to Latvia.
But Latvian Prime Minister, Aigars Kalvitis, said in January that his country would not attach any extra declarations to the treaty. 

Government secures Saeima's mandate to sign border treaty with Russia
Indeed, the Latvian parliament [Saeima] in the final reading passed a bill on February 9th authorizing the government to sign the border treaty with Russia without the explanatory declaration that Latvia previously wanted to attach to the document. 
During the final vote, 69 parliament members voted "for" and 26 voted "against" with no abstentions. 
Those MPs who voted against the bill included all lawmakers from the opposition centre-right New Era party and the nationalist alliance For Fatherland and Freedom/LNNK (TB/LNNK), as well as Visvaldis Lacis and Leopolds Ozolins from the Greens and Farmers Union (ZZS). 
A total of 13 proposals had been submitted for the second reading of the draft law, of which lawmakers approved only one submitted by the parliament legal affairs committee. 
However, the new wording of the bill says that considering Latvia's constitutional bill on the sovereign status of the Republic of Latvia passed on August 21th, 1991, and the internationally recognized continuity of the Latvian state, the parliament decides to authorize the Cabinet of Ministers to sign the draft border treaty with Russia initialled on August 7th, 1997. 
The proposal was approved with 89 votes to just one. Essentially, the change means that the Cabinet has the right to decide, which official will be sanctioned to conclude the agreement with Russia. 
Latvian Foreign Minister, Artis Pabriks, mentioned Prime Minister, Aigars Kalvitis, President Vaira Vike-Freiberga or himself as the potential candidates for signing the border treaty. "Now, the most important thing is what the president will do," he added. 
The government ministers attending the parliament session included Prime Minister, Aigars Kalvitis, Transport Minister, Ainars Slesers, Society Integration Minister, Oskars Kastens, Interior Minister, Ivars Godmanis, Welfare Minister, Dagnija Stake, and Foreign Minister, Artis Pabriks, who took the floor twice. 
A number of lawmakers voiced concern about the possible development of the situation in the future, warning that Russia or other political forces might demand two official languages or citizenship to Latvia's non-citizens. 
Pabriks told these speakers not to "mislead people... If there is a government and ministers like now, two official languages and citizenship to all will be out of the question." 
Several lawmakers criticized the prime minister, accusing Kalvitis of avoiding to comment on whether the declaration that Latvia wanted to attach to the border treaty two years ago, will be withdrawn. 
After the vote, lawmakers backed a proposal of ten New Era MPs to announce each lawmaker's choice. The proposal was approved unanimously. Latvian President, Vaira Vike-Freiberga, now has to decide on signing the bill into law, which is a certainty. 

Government coalition calls for mayor's resignation
The four-party coalition in government on February 7th submitted a petition - signed by 26 members of the Riga City Council - calling for the resignation of Riga Mayor, Aivars Aksenoks. The new coalition has nominated Janis Birks, currently deputy mayor of Riga, as Aksenoks' replacement. In order to initiate a vote of no-confidence in the mayor, the coalition needed 20 members of the council to sign the petition.
"People have been coming and signing [the petition] eagerly," Edmunds Krastins, chairman of the People's Party, said on February 2nd.
The four-party coalition calling for the resignation is composed of Latvia's First Party, the People's Party, the nationalist alliance of For Fatherland and Freedom/LNNK - all of whom are members of the current ruling coalition in the national government - and the opposition Latvian Social Democratic Workers Party. 
Aksenoks is a member of the centre-right New Era party, which is in opposition in Parliament. 
In the words of Baiba Buka, speaking on behalf of current deputy mayor and member of Latvia's First Party, Almers Ludviks, "The main reason for the petition was that we asked for the resignation of Riga City Executive Eriks Skapars. They didn't replace him, so we decided to ask for the resignation of the mayor [instead]."
Last week the coalition of People's Party, For Fatherland and Freedom/LNNK and Latvia's First Party asked New Era to nominate a new candidate to replace Skapars, but the latter refused. 
Normally the mayor heads a city's executive functions, but in Riga that job belongs to Skapars, as city executive. Mayor Aksenoks, by contrast, is chairman of the City Council. 
In rebuttal, New Era accused the coalition of attempting to divert attention away from the real problems facing the city.
Skapars had been accused of illegally pandering to gambling halls in Riga. Despite the fact that Saeima (Latvia's parliament) recently passed laws strictly regulating the number of new gambling halls that could be opened, new ones "kept appearing around the city," Buka said. 
However, Buka noted that Skapars was not the only reason for the petition. "The problem is that the mayor of Riga has shown a lack of vision and an inability to work with coalitions in the city," she said. The representative also contended that poor administration over building a new concert hall in Riga "demonstrates [the mayor's] lack of management skills."
The expanded four-party coalition was officially formed on February 6th, with a document outlining their goals over the next few years. A day earlier, the coalition met to discuss possible candidates for the mayor's position and decided on Birks, a member of the right-wing For Fatherland and Freedom. The nominee stated that he was confident that members of New Era, who are currently represented by Aksenoks, would back his nomination for the post. 
Meanwhile, the New Era party has invited For Fatherland and Freedom to meet and discuss cooperation. For Fatherland and Freedom, however, has responded that the invitation comes too late, and that New Era is unlikely to change their attitude. 

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BANKING

Bank of Latvia's assets soar


As another sign of the strengthened Latvian economy, the Bank of Latvia has announced soaring figures in its balance sheet for 2006. The bank's assets grew 54.7 percent or 914.98 million lats last year, reaching 2.59 billion lats (3.68 billion Euro) at the end of December. In December alone, the bank's assets increased by 0.2 percent or 5.38 million lats. Vilnis Purvins, head of the monetary policy section under the Macroeconomic Analysis Department of the Bank of Latvia, explained that the growth in central bank's foreign assets in December 2006 meant - up 0.2 percent or 5.11 million lats reaching 2.55 billion lats - growing value of derived financial instruments in lats. The bank's foreign liabilities in December 2006 rose by 3.851 million lats or 2.9 percent to 138.66 million lats, as the European Commission deposits with the Bank of Latvia in foreign currency increased, but the European Commission deposits with the Bank of Latvia in lats decreased. The Bank of Latvia domestic assets stood at 34.87 million lats at the end of December last year, up 0.8 percent or 0.27 million lats from the month before. Domestic liabilities in December 2006 reduced by 43.78 million lats or 3.3 percent to 1.27 billion lats, as deposits by the government decreased by 227.2 million lats, deposits by credit institutions with the central bank increased by 180.2 million lats, and deposits by other financial institutions rose by 2.9 million lats. Mainly due to the above changes, the amount of lats in circulation increased by 4.9 percent or 50.01 million lats in December last year, reaching 1.27 billion lats on December 31, 2006, the central bank's representative said.

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