RIGA - The Latvian parliament re-elected Ilmars Rimsevics to a second six-year term as head of the Bank of Latvia. It was no contest as he garnered a unanimous 92 votes cast in the 100-seat Parliament, with one abstention.
Hansabanka board chairman Maris Avotins said that the governor's re-election is a positive signal both for Latvia's economy and the foreign audience. "It shows that Latvia is responsible regarding monetary policy issues and is able to ensure sustainability," he said.
Rimsevics said after the vote that the Latvian central bank will continue its work on moving Latvia into the euro-zone. "It [the euro] is an issue of economic stability and of national security as well," he said.
He said that the most realistic timetable for Latvia's introducing the euro could be 2012 - 13. This would be "a prize for the reduction of inflation and would be a guarantee for Latvian economic stability," he said. He added that the Bank of Latvia would put in a lot of effort in explaining to the population why the introduction is necessary.
The director of the Latvian Academy of Science's Economics Institute, Raita Karnite, said that though the bank's position will not change going forward, it should begin paying attention to microeconomic issues, rather than solely on ensuring macroeconomic stability.
The governor will undoubtedly be spending the start of his second term on Latvia's continuing macroeconomic imbalances. Director at investment fund GAM, John Bennett, in London, expressed his concern that "the Baltic [stock] markets are over-heated, and heading for a crisis," reports news portal Delfi.lv. Bennett goes on to suggest that currency devaluation could be used to improve the situation. He says that "Share prices have risen too rapidly."
Rimsevics has long maintained that as long as he's in charge of the central bank the lat won't be devalued, according to Bloomberg news service. The bank used about 10 percent of its reserves to defend the currency in February and March this year when speculation around a devaluation sparked a selling frenzy.
Latvia's year-on-year inflation rate for September was running at 11.4 percent with a current account deficit for this year's second quarter of 23.5 percent of GDP.
