PM Valdis Dombrovskis: ‘Fiscal adjustment and structural reforms, key to regaining financial stability’
The Centre for European Studies (CES) organised on the 6th of December in Brussels a conference on Latvia’s economic recovery towards stability and competitiveness. The event, titled ‘From Tough Reforms to Eurozone Membership: Latvia’s Road to Growth’, brought together over 150 participants and featured Latvian Prime Minister Valdis Dombrovskis, as well as key members of the European Parliament such as Corien Wortmann-Kool and Tunne Kelam, who stressed the crucial role the government has played in leading the country out of the crisis and in turning these achievements into one of the most remarkable European success stories of the last two decades.
‘We were severely affected by the economic crisis [in 2008] and one of the key factors which helped us to go out of this crisis was the fact that we went through a fiscal adjustment and structural reforms early on, which helped us to regain financial stability and to return to economic growth’, stated Prime Minister Dombrovskis. He also stressed the need to take decisive decisions at a very early stage. ‘If you delay this adjustment or postpone it and discuss the traditional “austerity against growth” debate, what unfortunately will happen is that you get deeper into recession’.
As an example of a successful programme of reforms for fighting the economic crisis, the Prime Minister shared Latvia’s particular approach, which was based on the stabilisation of state finances, the maintenance of the euro peg, setting the target for Eurozone entry in 2014, the improvement of administrative efficiency, a reform of the tax system, health and education, and stimulation of the economy with the help of EU funds.
The latest statistics show a 5.3% increase in GDP during the third quarter of 2012 compared to the same period a year ago, which clearly shows that Latvia’s economy is working again, as was highlighted by Antonio López-Istúriz, CES Secretary Treasurer, EPP Secretary General and a Member of the European Parliament. He also emphasised Mr Dombrovskis’s efforts to guide his country towards Eurozone membership ‘at a time when some sceptics cite the euro crisis as proof of Europe’s failure […] he knows that Latvia’s future—and indeed the future of Europe—depends on more integration, not less’, and suggested that economists and policymakers consider whether all these measures could be applied in other countries, despite the very different national political realities.
As stated by Wilfried Martens, President of the EPP and CES, ‘Latvia once again has one of the highest growth rates in Europe, the peg has held and accounts are close to being balanced. Unemployment is in decline and the country is on track to join the Euro, where we all want it to be’.
‘There is no single bullet for resolving the current economic, financial and social crisis. The causes of the crisis were complex and the solutions cannot be simple’, continued Mr Martens. Moreover, Latvia still has measures to implement going forward, as Mr Dombrovskis indicated: ‘we are now in a good position but we need to continue working. Some of these future reform plans include the adoption of the Law of Fiscal Discipline, a continued monitoring system to avoid imbalances and improve competitiveness, and structural reforms aimed at improving Latvia’s business environment and investment climate’.
Note to the editor: The Centre for European Studies (CES), established in 2007, is the political foundation of the European People’s Party (EPP). The CES embodies a pan-European mindset, promoting Christian Democrat, conservative and like-minded political values. It serves as a framework for national political foundations linked to member parties of the EPP, with 26 foundations currently members. For more information, please visit www.thinkingeurope.eu.