Public saving plan with tightening of real estate trading
An IMF mission visited Latvia in April leaving few operational ideas for immediate cure of the
country's immense current account deficit - other than asking the public sector to do where the
private failed in securing an appropriate saving balance with abroad.
In this fashion, the organization appears believe that by requiring a fiscal budget surplus in the area
of four percent of GDP should help as an achor for the relief of a current account deficit more than
six fold this size. The proposal arrives as only sporadical thinking in times of severe economic ills.
While leaving the devaluation whispering of the Lats from last fall - obvious initiaitves are
neverhteless missing in support of private saving plans. In this fashion, a country raising the ladder
when measured in terms of prompt economic recovery towards the mature EU economies - needs
obvuius institutions in parallel with those. Areas in terms of health insurance, life insurance and
genuine pension schemes are missing. And policy initiaitive along these lines are obviously
warranted in supplement to Government's present anti-inflation reform.
By leaving the country with a requirement to tigthen fiscal policy on the margin - including a
proposal for deep cuts in government capital expenditure that only contribute to intensify existing
bottlenecks in the Latvian economy - and supplementing with adjustments to recurrent real estate
trading market, the organization's policy proposals surface as short term cosmetics that may leave
the economy with longer term scars. Breathing warrants wider reform, building incentives for a
sustainable future.