Latvia's government pushed on recovery plan

  • 2009-07-23
RIGA - Disappointment with the direction of Latvia's economy, and the response from the government, continue to weigh on the outlook of the country's industrial leaders. Members of the Economists' Association 2010 on July 17 gathered and expressed their views on the situation to the Minister of Economy Artis Kampars, hitting on topics including the ministry's plan for economic recovery, and its priorities, according to the association's representative Dace Mence, reports news portal
"The government does not have a clear vision and a plan on how to overcome the crisis," complained a group of businessmen attending the meeting with senior government officials. Prime Minister Valdis Dombrovskis and Kampars in rebuttal defended themselves by saying that these allegations did not meet the spirit of the talks.

According to the businessmen, the government has neither a short- nor a long-term economic plan.
 While the objectives stated in the meeting were already well-known, the business leaders appreciated the chance to meet with the ministers, who expressed their desire to hear expert advice on drafting a recovery plan. It was clear that it will be crucial to agree on the right goals with the most effective tools to implement priorities, and of the importance to regain the public trust in the plans.

The prime minister stressed that Latvia's economic model has to be changed, one from a labor intensive economy, to a knowledge-based economy, which means the need to promote international competitiveness, increased productivity and to make products with high added value. To reach these goals, the country's economic policy priorities should be able to create the enabling environment, with targeted and selective government support.

The association's president, Ojars Kehris, acknowledged the vital importance of competitiveness, noting that it will not be easy to combine with the government-planned selective support policies, which risks the potential for widespread protectionism. Government support, as often acknowledged, goes often to the well-written, in funding applications, rather than to truly product-oriented innovation.
Economist Dzintars Kalnins welcomed the plan's section for small business support, highlighting the introduction of a fixed tax regime and for simplification, in maintaining positive pressure, as is the case with the U.S. systems.

"At the moment I can only say that I still have the desire and energy to keep on going," said Kampars at the end of the meeting. He also expressed his willingness to continue to regularly listen to and consult with the views of the economists in the association.