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RIGA - Estonian Prime Minister Andrus Ansip, during the 11th Baltic Economic Forum, stressed that the Baltic States need to boost productivity in order to ensure future success, reports news agency LETA. The 11th Baltic Economic Forum was held in Riga, Latvia on Sept. 24, during which the participants discussed issues related to the region’s competitive ability, the most important future challenges it is facing and the lessons it has learned from the financial crisis. Prime ministers of all three Baltic States took part in the event.
“Productivity has risen in recent years throughout the Baltic States, but it’s still below the EU average,” he explained. Boosting productivity is directly connected to investments in the education system, which in the view of the prime minister must continue. “Thirty four percent of the Estonian working-age population have a higher education, but unfortunately the same proportion lack professional skills of any kind. Estonia’s goal is to increase the proportion of its qualified workforce,” Ansip noted.
The prime minister also spoke about the importance of Estonia’s conservative budget policy. “The basic lesson Estonia learned from the global financial crisis was the crucial need for a conservative budget policy,” Ansip said, adding that such a policy is the only way of creating the conditions needed for a country to survive difficult times.
Latvian Prime Minister Valdis Dombrovskis (New Era) talked about Latvia’s experience of going through the global economic and financial crisis, when Latvia’s GDP plummeted, and Latvia was one of the countries in Europe that had been hit very hard by the crisis. The immediate task for Dombrovskis’ government was to stabilize the situation, avert default and devaluation of the lats, which was done through painful and extensive structural reforms to the national economy and the social and public administration sectors.
The first lesson from the crisis was that reforms begin where money ends, because many of the pending reforms in the health care and education sectors had been known much earlier. The other lesson from the crisis is that there is always an exit from any crisis, Dombrovskis said. In Latvia’s case, this means joining the euro area in 2014, ensuring internal stability in the country and reliability on the international level.
The third lesson was the extensive participation of social and cooperation partners of the government in taking the most important decisions to stabilize the situation in the country. Finally, the fourth lesson taught was for the government to take courageous decisions without delay, said Dombrovskis.
The prime minister also stressed the importance of the Baltic Sea region’s competitiveness to the economic growth of the region. He said that the priorities might include coordination of the tax system in energy and transport, as well as cooperation on innovation and research.
Though markets of third countries are important, the main markets for the Baltic States lie in the European Union (EU), said European Commissioner for Development Andris Piebalgs at the Forum. According to him, it is good to look eastwards towards markets in Russia and the former Soviet Union; however, Latvia’s primary markets must be in the EU, which has over 500 million consumers competing in a modern and developed economy and marketplace.
Speaking about the ability of the Baltic States to overcome the economic crisis, Piebalgs said that what has happened in the Baltics can be labeled as a miracle, because the leaders of the three countries were able to take responsibility and carry out tough, yet necessary reforms. “The work carried out by the Baltics has been excellent, and must continue,” said Piebalgs.
Striking a more strident tone, Latvia’s auditor general, Inguna Sudraba, sharply criticized the current system of utilization of national resources, stressing the importance to improve this system as soon as possible. She noted a string of violations that the State Audit Office had uncovered in the management of national resources and assets. On many more than one occasion, the Audit Office had to conclude that state property and resources were not being used in society’s interest and in the way they had to be used.
In Sudraba’s opinion, the management of state assets has been inefficient, and it is impossible to say if everything possible has been done to raise the value of state assets. The current state asset management system must be changed in every single aspect, Sudraba said.
Latvian Investment and Development Agency head Ainars Ozols reminded Sudraba that she had been working in her job for six years already, and said he did not understand why these questions and problems, which he agreed had to be dealt with, were not being tackled in Sudraba’s daily work with the government, but instead publicly announced at an international conference.
Sudraba replied that only a “best friend” can point out the actual situation, and thus help solve it.
Although the crisis period has been very hard for all three Baltic countries, Latvia’s prime minister, Valdis Dombrovskis, is “the greatest hero of the three premiers,” said Lithuanian Prime Minister Andrius Kubilius. Kubilius praised Dombrovskis’ work to achieve economic and fiscal stabilization in Latvia, which was of crucial importance for not only Latvia, but also Lithuania and Estonia.
Dombrovskis rescued not only Latvia but the entire region, and it was a truly heroic deed. If Dombrovskis had not succeeded, Latvia would have been in a much worse situation now - as well as Lithuania, said Kubilius. He also said that Estonian Prime Minister Andrus Ansip had more options to deal with the crisis than the other two Baltic premiers, thanks to Estonia’s far-sighted policy of maintaining a budget surplus.
Kubilius believes that all politicians can learn from Dombrovskis, who had to take a number of bold decisions to lead Latvia out of the crisis.
Although the economic situation in the Baltic countries has been improving, a number of issues need to be solved to help integrate the Baltics into the Nordic region, Kubilius said. Only through close cooperation can the Baltic countries catch up with the Nordic countries and become competitive in the region.
Ansip in turn stressed that the main lesson taught by the crisis was that small countries must put money aside when times are good, which they could use when they fall on hard times. In Estonia’s case, it was budget surpluses for several consecutive years that helped the country tackle the economic crisis, he said.
At the same time, Ansip admitted that a budget surplus was not easy to achieve. Politicians always have wonderful ideas in how to make people happy with taxpayers’ money. It was not easy for the Estonian government to keep money in reserve, but it was very important, he said.
Ansip also said that all three Baltic countries must cooperate more closely.
The 11th Baltic Economic Forum gathered participants not only from the Baltic States, but from Belarus, Russia, Sweden, France, Italy, Denmark and the Netherlands as well. Businessmen, politicians and experts participating in the congress discussed the Baltic countries’ experience of dealing with the global economic and financial crisis, and the opportunities and the challenges to improving the region’s competitiveness within the European Union’s strategy for the Baltic Sea region.