||Latvia Business News: Archive 2003-2006
Friday, the 26th of May, 2006
Sucking in the profit of banks
On May 24, the new Bank of Latvia regulations for obligatory reserves came into force. They stipulate that the banks must deposit 8 per cent of all their obligations that last more than 2 years, which would add LVL 253 million to the already deposited LVL 567. However, credit market will not suffer, as new money will come in from mother banks of the large Latvian banks. Rates for credits or deposits in LVL, however, may reach 5 per cent, as banks solve the shortage of LVL. Bankers believe that the new regulations will make them purchase LVL for foreign currency from Bank of Latvia, but overall the only bad consequence could be decreased profit.
Thursday, the 25th of May, 2006
Overall situation is improving
In the first quarter of 2006, the number of economically active people, that is, those who are employed or actively seeking a job, has increased by 0.8 per cent in comparison to the last quarter of 2005, now reaching 1.15 million, whereas the number of economically inactive people has decreased by 1.9 people, now reaching 0.66 million. However, the situation might become worse after a few years as those who were born at the beginning of 1990-ies become economically active; birth rates were very low during the period. 7.8 per cent or 89.2 thousand of all the economically active people were seeking a job, and 1.06 million were employed.
Wednesday, the 24th of May, 2006
Market waiting for price adjustment
The Latvian credit market has been growing steadily; in 2005, banks have given credits for LVL 6.96 billion, a 58.9 per cent increase from 2004. More than a half of all the credits were mortgage loans. The rapid growth has had no ill effect on Latvian banking sector; the percentage of bad credits has actually decreased. Banks expect the rapid growth to continue until about 2008. Experts believe that real estate market, the main driving force of the rapid credit market growth, is stable enough to support the growth, and it may be shaken only by a large macroeconomic shock. However, as the market approaches saturation, stabilisation is expected. Experts of Nordea bank believe this may happen at the end of 2006 or beginning of 2007.
Tuesday, the 23th of May, 2006
We will have to wait long for euro
On May 22, Oskars Spurdzins, Latvian minister of finance, finally admitted that Latvia will not be ready to join eurozone by 2008. Spurdzins admits that it is impossible to lower the inflation from the current 6.1 per cent to the needed 2.6 per cent. Spurdzins also says that a new date will be decided within the next two months. Most likely the new date will be 2010, the same year Estonia hopes to introduce euro.
Biznes & Baltija
Monday, the 22nd of May, 2006
Suggestion to extend the privileges
European Commission suggests extending the term of e-commerce VAT directive until December 31, 2008. The directive stipulates that electronic services delivered for use outside EU are free of VAT; VAT is imposed on the services for use within EU. The extended term would help compete against third-country suppliers who do not have to pay VAT at all.
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