RIGA - Martins Kazaks, Governor of the Bank of Latvia, urges banks to write off the so-called "fat year" or "bubble" era debts that would allow more than 10,000 people to return to the economy.
As Kazaks said in an interview with Latvian Television this morning, a significant number of residents took out loans in the so-called "fat years", mostly mortgages that many were unable to repay later. Part of the property was expropriated, but in many cases it was not enough to pay off their debts. At present, many banks consider these debts irrecoverable, but they have not been technically written off.
Kazaks believes it would be fair to write off these debts, given that banks are no longer counting on their recovery. Such a move would allow more than 10,000 people, some of whom are a part of the shadow economy or have emigrated abroad, to be returned to the Latvian economy.
According to the governor of the Bank of Latvia, the debt is about half a billion euros. Writing them off would help support the Latvian economy.
To implement this idea, Kazaks invites the financial sector, the Finance Latvia Association and the responsible parliamentary committee to come together and discuss the necessary legislative changes to prevent past mistakes.