economic crisis management: latvian story

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Economic crisis management: Latvian story

Andris Vilks Minister for Finance

Riga, November 2, 2012

From Crisis to Recovery

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The Latvian Economy has Recovered from Crisis

3 Source: Central Statistical Bureau of Latvia. Forecasts Ministry of Finance

GDP growth, constant prices, %

Budget deficit has been reduced by implementing austerity measures in amount of 2,3 billion lats or 17% of GDP

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Frontloading Budget Consolidation 2008–2012

Fiscal Targets and Results

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Key Policy Goals & Objectives

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Lessons Learned

Devaluation was neither necessary

nor inevitable

Frontloaded fiscal adjustment is

preferable

Better to cut public expenditures than to

raise taxes

International rescue should be

appropriate and front-loaded

Unstable coalition government is not

necessarily an obstacle for crisis

resolution

Populism doesn’t work in a serious

crisis

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On the Way to Euro

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Challenges in Future

Sustainable Economic Growth

• Improve business environment • Strenghten competitiveness • Fiscal discipline that supports

growth • Developments in the EU

Structural Reforms

• Social sector • Education • Public administration • Labor market policy

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Conclusions & recommendations for the rest of the EU

Strong and well-functioning EMU Fiscal discipline Responsible

decision making

Respecting commitments

undertaken with the Fiscal Treaty and

"6-pack"

Swift implementation of the 2-pack

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Economic crisis management: Latvian story

Andris Vilks Minister for Finance

Riga, November 2, 2012