Slesers demands answers

RIGA - Banks that are stuck in the process of restructuring, which may take several years, are not full-fledged contributors to the national economy, Financial and Capital Market Commission’s Chairwoman Irena Krumane says in the commission’s 2010 annual report, reports Nozare.lv. In Krumane’s opinion, the unbalanced economic recovery of Latvia is also accompanied by concern about a second wave of problems that may arise in the process of restructuring loans that are past due.
The quality of loans stabilized in the second half of 2010 as the amount of delinquent loan payments dropped; the amount of loans being restructured also decreased. However, the quality of loans again began to waver at the beginning of this year.
“Businesses as well as households still have problems with paying their debts as the cost of living, inflation, tariffs and taxes continue to increase while their incomes remain unchanged,” adds Krumane.

She also notes that although the decision of the European Central Bank may herald the beginning of the end to the global financial crisis, it has to be taken into account that loans will become more expensive again, and this will mostly affect those who have borrowed in the euro currency. In Latvia’s case, this means the majority of borrowers.
“The Latvian economy must find a solution for fostering productivity in the current circumstances, increase competitiveness and the creation of new jobs, because right now unemployment continues to decrease largely because of emigration,” stresses Krumane.

The FCMC chief believes that Latvia’s economic development in the past several years was deformed due to several short-term decisions and because only some of the national economy sectors were being developed.
Given that inexpensive financing is no longer available, the government’s endeavors to reduce the market share of the shadow economy are highly important, says Krumane.