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25 March 2013

Latvian State Chancellery publishes speech by PM Valdis Dombrovskis at the Plenary Session of the Saiema


Mr Dombrovskis submitted for evaluation the fourth annual report of the performance of the government under his leadership.

Speaking of the national economy development, I would like to emphasise that the government's policy to put the national finances in order - a prerequisite for economic growth, has proven itself. If a number of experts in 2011 had doubts whether Latvia has really overcome the crisis, the GDP growth of 5.6 per cent in 2012 has convinced even the sceptics. One of the most important growth factors in the last two years has been the rapid development of export industries. Similarly to the 2010 and 2011, the last year's exports showed an impressive growth of 15 per cent, which is among the best indicators in the European Union. Export-led growth is also important because it is the best evidence of the competitiveness of the country, which is one of the major milestones towards general national wealth.

Successful return to international financial markets is another proof of our country's competitiveness. Latvia’s credit rating increase at a time when some of the world's leading economies felt the pressure in the opposite direction, confirms that the work done to improve public finances has brought results. Further evidence of regained confidence in the financial markets is the successful issuance of government securities. I would especially like to note the issue of December last year, when the Treasury managed to sell seven-year bonds for 1.25 billion US dollars at an average annual yield of 2.89 per cent. This is historically the lowest interest rate on long-term bonds, since Latvia began the government borrowing in international financial markets.

Unlike the previous National Development Plan, this plan has a financial coverage; it is linked to the EU's multiannual financial framework, and anticipates the funding of LVL 8.23 billion for investments in national development for a seven-year period. Of course, this plan does not cover all activities financed by the country and the EU funds, but here I would like to stress that one of the objectives of the NDP was to separate national daily functions from the development functions. Currently, one of the main challenges is to ensure the effective implementation of this plan and achieve the set results.

To ensure effective implementation of the plan, it is provided that once every two years the Cabinet will submit to the Parliament a single, integrated report on the NDP2020 and implementation of the Sustainable Development Strategy of Latvia until 2030 that will allow assessing how the objectives set in these documents are being met.

Latvia's experience in overcoming the crisis has clearly demonstrated the importance of strict fiscal discipline in the development of the country. Ensuring the fiscal discipline, while maintaining the progress towards the budget that is balanced within the economic cycle in accordance with the Stability and Growth Pact, will be one of the government’s priorities in the future as well.

In that regard, I'd like to point out the Law on Fiscal Discipline approved by the Saeima in January 2012. This is an important step towards strengthening of a responsible fiscal policy, because it is the first time when the law stipulates that Latvia should create a balanced budget within the economic cycle thus ensuring sustainable development of the country, macro-economic stability and reducing the negative impact of external factors on national economy. I want to emphasise that the adopted law on fiscal discipline is harmonised with the Treaty on Stability, Coordination and Governance in the Economic and Monetary Union ratified last May, thereby allowing Latvia to become one of the first countries that ensures eligibility of the national legislation to conditions of the Treaty of Fiscal Discipline.

Full speech

 



© Latvian State Chancellery


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