During today’s meeting, President of Latvia Egils Levits and Governor of Bank of Latvia Mārtiņš Kazāks discussed the impact of sanctions against Russia on Latvian economy and economic forecast for Latvia. Egils Levits and Mārtiņš Kazāks both underlined that all European countries will be equally affected by sanctions, and Baltics may emotionally feel worse off than others because of proximity with neighbouring Russia. ‘Sanctions are a way to secure our future and reduce the impact of unpredictable aggressor’s decisions on Latvia,’ President Levits noted.
Gas and oil prices are not likely to drop in foreseeable future, pointed out Governor Kazāks. This will not be the ‘only expensive winter in terms of energy costs’. This price hike cannot be ignored either politically or socially, President of Latvia agreed. Latvia must start focusing on structural long-term adjustments. Government should help vulnerable groups and other struggling groups cover their energy and heating bills, Egils Levits suggested. Assistance must be targeted in time. Instead of benefit-type assistance, government should offer inhabitants support schemes for improving household energy efficiency and switching to other kinds of heating systems.
According to Governor Kazāks, economic uncertainty is a problem that affects both Latvia and the rest of the world. ‘Inflation is high. Government should resist the temptation to try and help population with financial benefits for all. Some have accrued significant savings during the pandemic and covering increasing energy costs next season will not be a problem for them. Assistance should target the disadvantaged groups, while government should continue investment programmes in strategic areas such as energy efficiency, renewables and skills development to tackle future demand for various kinds of government assistance,’ Mārtiņš Kazāks pointed out.
