NIB praises recovery effort

RIGA - Latvia has succeeded in implementing difficult measures in order to overcome the crisis, said Nordic Investment Bank (NIB) President Johnny Akerholm in an interview with the business daily Dienas Bizness. “The bursting of the bubble was unavoidable, regardless of the global crisis, which caused it to happen more suddenly and also influenced the timing of the crash. Latvia probably saw the biggest bubble and the hardest fall. I think that it made a big impression on us all that the International Monetary Fund and European Commission’s support measures were implemented with such urgency. The crisis created many painful and tragic stories in many countries, so it is good to see that export and manufacturing volumes are now on the increase. Even if the readjustment was a difficult process, the measures taken are now starting to pay back,” stressed the banker.

Akerholm noted that many were surprised to see Latvia’s current government receive the support of the electorate in the recent Saeima elections. “I think that was a surprise, as it is generally accepted that politicians cannot take unpopular steps and then be re-elected. Many are now looking at Latvia with great interest.”
He indicated that the measures taken to overcome the crisis should be seen as long-term investments, as this will definitely be remembered by investors. “A country which manages to deal with its problems can be trusted in the future. Finland was one of the few countries which were able to pay its debts back in the 1930s, and this is still remembered by the Americans; this led to a flow of investment into the country.”

The bank chief stressed that it is one thing to stabilize an economy after a crisis, as Latvia is now doing, but it is another matter to create stable long-term growth. Not just Latvia, but each of the Baltic States will require investment in order to increase manufacturing capacities. The government has to put a range of factors in place in order to ensure real competitiveness, for example access to a trained workforce, a good business environment, the necessary infrastructure, and access to markets.

“I often wonder what it is that encourages investment in one place and not in another. Taxes, of course, are a significant aspect; however, there are many other factors, such as access to raw materials, trained workers, legislation, and political and macroeconomic stability,” explained the NIB president.