Dombrovskis receives international economics award

Latvian Prime Minister Valdis Dombrovskis on Dec. 4 participated in the Friedrich August von Hayek Award ceremony in Freiburg (Germany) where he received the international award for his contribution to the stabilization of Latvia’s economy. Prime Minister of Estonia Andrus Ansip also received the award, reports the PM’s office.

In his address to the audience, the former Vice-Prime Minister of Poland and former President of the Central Bank of Poland Leszek Balcerowitz emphasized that the strict fiscal discipline of the Baltic countries has enabled them to overcome the crisis quickly and return to economic growth in a short time – it is an experience from which all eurozone countries can learn. “An important lesson that all European politicians could learn from the accomplishments in Latvia and Estonia is that it is possible to maintain public support and win elections also during a crisis and implementing unpopular reforms.”

The awards to the heads of government of Latvia and Estonia, as well as to the recipient of the F. Hayek’s journalism award - Head of the Economic Division of Frankfurter Allgemeine Zeitung Rainer Hank - were presented by the former President of Germany Roman Herzog. Upon receipt of the award, Dombrovskis pointed out that one of the reasons why Latvia was hit particularly hard by the global crisis was an exaggerated optimism after accession to the European Union and NATO. “After joining the two organizations in 2004; Latvia had achieved its strategic objectives and it seemed that nothing can go wrong in the future. It seems that this sentiment dominated also the eurozone countries and was reflected in the financial markets.

Latvia was flooded with cheap credit and was a classic example of F. Hayek’s theory – if resources are available too easily, they are spent inefficiently,” said Dombrovskis. “One of the key conclusions from Latvia’s experience is that in order to quickly overcome the crisis and return to growth, fiscal consolidation should be implemented as early as possible to maximize its effect. If consolidation is delayed, as in the case of Greece, the crisis deepens and it is impossible to return to growth. All eurozone countries should take this into account because, if we do not regard a country’s withdrawal from the eurozone as an opportunity, then the only way to regain competitiveness is fiscal consolidation and implementation of structural reforms,” said the prime minister in his address to the participants of the ceremony.

The international award is presented once every two years. The previous laureates include Margaret Thatcher, former prime minister of Great Britain, Vaclav Klaus, president of the Czech Republic and former Vice Prime Minister and former President of the National Bank of Poland Leszek Balcerowicz, as well as Prime Minister of Italy Mario Monti. Hayek (1899-1992) is one of the leading economists and social philosophers of the 20th century who protected the freedom of the individual and market economy. Hayek carried out his research at the London School of Economics, the University of Chicago as well as at the University of Freiburg. In 1974, Hayek received the Nobel Prize in Economics.