Restrictions in the economy will continue at least until the summer - Fiscal Discipline Council

  • 2021-01-24
  • LETA/TBT Staff

RIGA - Restrictions in the economy will continue at least until the summer, the Fiscal Discipline Council (FDP) forecasts in its regular crisis monitoring report on the impact of Covid-19 on the national economy and the fiscal situation.

"It is clear that partial economic constraints will continue at least until spring or summer and that economic support measures are likely to continue for several months. It is therefore important to regularly assess their effectiveness and the proportionality of support to the economic downturn, adjusting programs if necessary,'' the report states.

The FDP acknowledged that state aid in the Covid-19 crisis has not been reaching its planned levels, so the dialogue with business and public interest representatives must have to be adjusted taking into account both short-term economic and social aspects, as well as medium-term fiscal aspects.

"Economic recovery and a return to fiscal sustainability will only be possible after the end of the Covid-19 crisis. Therefore, there is an urgent need to invest adequately in vaccination, which must be a top government priority now, both from a public health and economic point of view," said fiscal discipline supervisors.

The FDP informs that large European Union (EU) investments are expected in Latvia in the coming years, therefore the Ministry of Finance should analyze the planned investment amount, investment project selection criteria, the time schedule and its impact on the economy, which is important to take into account when planning fiscal policy.

"The rapid and effective implementation of the European Recovery and Sustainability Mechanism over the next two years is a key priority for the government. Work on this is not moving as quickly as it should be," the FDP said, adding that the council was ready to engage in the process.