Central bank governor presented the most recent macroeconomic forecast prepared by the bank and underlined that resurgence of COVID-19 has sent ripples through Latvian economy. Restrictions imposed to control the pandemic continue to cause different levels of distress for sectors and individual companies, but the economy is holding together quite well. Government must continue to prepare for future shocks. According to Mārtiņš Kazāks, we should rather recognise that the world has changed, and we must move one, we must have a future-oriented strategy instead of trying to get back to pre-pandemic levels in economy.
President and Governor discussed future growth prospects and agreed that government should implement more targeted support programmes, especially when it comes to providing new skills and reskilling the workforce for jobs that are better paid. President Levits stressed that ‘government must define clearer criteria and list of industries that should benefit most from public investments from European Recovery and Resiliency Facility and national budget over the next decade. That way we will have more sustainable growth and resilient economy at the national level, and greater international recognition’. Egils Levits and Mārtiņš Kazāks pointed towards lack of comprehensive and strategic national-level discussion on how to fully utilise the opportunities provided by the European Green Deal for the benefit of our country. To maximise the returns of European Recovery and Resilience Facility for Latvia, available funding needs to be invested in a much more targeted way.
As regards to merging of FCMC and Central Bank, Governor Kazāks underlined that such step would have more benefits than risks. However, it is also crucial to ensure that the integration of FCMC into central bank does not undermine the independence of the Bank of Latvia by, for example, fragmenting or over-politicising the appointment of supervisory board members. ‘Quick decision-making procedures, decisions aligned with public interests, impartial analysis of areas within its scope of responsibility can only be provided by politically independent leadership of the Central Bank that works as a tight unit,’ stressed Mārtiņš Kazāks.
President Levits and Governor Kazāks also talked about current situation with combating financial crime and financial sector, as well as tax reform tabled by the government.
