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Latvia Business News: Archive 2003-2006

WEEK 23.2006

Monday, the 5th of June, 2006

The salary increase overtakes inflation
In the first quarter of this year average monthly salary in Latvia has risen by 19.2 per cent. This increase has substantially overtaken inflation that was 7 per cent. In the public sector salary rise increased by 18 per cent, including budget institutions - by 15.4 per cent, however in the state and the municipality companies by 22.4 per cent. In the private sector salary rise increased by 20.8 per cent. In the first quarter of this year average gross salary in Latvia was LVL 268.94, however in the respective period last year - LVL 225.64. The increase of the monthly minimum pay from LVL 80 to LVL 90 resulted to salary rise, as well as increase of the non-taxable minimum from LVL 26 to LVL 32 and populations income tax allowance increase form LVL 18 to LVL 22.
Dienas Bizness

Monday, the 5th of June, 2006

Latvian economy is very dependent
Latvian economist Raita Karn_te believes that the official statistical data do not show the real situation of the Latvian economy. Overheating of the economy is not a tragedy because the rapid raise of inflation, negative current balance and extremely active real estate market is tightly connected with the country’s historical background. One of the main problems is rapid borrowing of money. According to the World Bank’s research on vulnerability of the new EU states, Latvia is showing exceptionally bad results in total foreign debt – it is 97.4 per cent of GDP that means that all GDP produced in Latvia in a year time belongs to the outside world. There is a mistaken belief that Latvians have not borrowed enough money. In reality the borrowing level is 63.6 per cent of GDP. There is a huge crediting increase - 55.9 per cent in the third quarter of 2005. Karn_te believes that government should not practice restrictive policy to reduce inflation. The government should consider that GPD is too small instead of thinking that credits are too big. The state policy should be directed to earning money from the borrowed funds not only to selling out internal resources as it is now.
Dienas Bizness

Tuesday, the 6th of June, 2006

There are perspectives
Ministry of Finance offers novelties in application of VAT that could be more favourable to the Latvian businesses. Ministry of Finance has submitted to the Latvian government a proposal to apply the EU standards in VAT. According to the 6th directive of the Council of the EU 72 norms could be implemented. For example, VAT grouping, which allows not imposing VAT on dealings among legal persons who are interrelated financially, economically and organizationally within the framework of one EU state. Another important innovation is deferred payments of VAT for imported goods. The proposal, which gives VAT payers rights of choice in application of VAT in real estate dealings, is also positively assessed. However, the Latvian Customs Brokers Association believes that some novelties might not be effective in customs operations.
Dienas Bizness

Tuesday, the 6th of June, 2006

Ministry of Economics is organizing consumer product price monitoring
According to unofficial news, Euro in Latvia will be introduced not before 2010. From June 1, Ministry of Economics is starting to monitor prices of basic consumer products on a regular basis. The results will be published on the website of the ministry and will be updated twice a month. The ministry started the monitoring to prepare for the introduction of Euro. Statistics show that consumer price index in April 2006 increased by 0.6 per cent comparing to March.
Bizness&Baltija

Thursday, the 8th of June, 2006

Taxes are paid just like they are spent
The research centre SKDS has questioned 1,006 Latvian residents to find out their views on paying taxes. The statistics show that 41 per cent of Latvians think that not paying taxes fully or partially is acceptable. However 40.2 per cent categorically disagree with this opinion. 18.9 per cent did not have an opinion. In 2001, 35 per cent of the respondents accepted not paying taxes. This growing tendency is reflecting Latvians’ disappointment with how the tax money is spent. For example, construction of the new national library in Riga that will cost over LVL 100 million of tax money, is not considered as good tax money investment.
Bizness&Baltija

Thursday, the 8th of June, 2006

Workers are packing their suitcases
According to the survey of the European Agency for Safety and Health at Work in the next five years 40-50 thousand Latvians or 7.4 per cent of the Latvian work force plan to leave the country to earn money abroad. 55.6 per cent of the respondents consider low salaries in Latvia as the main reason for leaving the country. Men between ages 15 and 24 showed the most interest in leaving.
Bizness&Baltija

Friday, the 9th of June, 2006

The great ice hockey has increased inflation
Experts believe that the World Ice Hockey Championship, which took place in May, influenced increase of inflation. The statistical data show that comparing to May 2005 this year consumer prices raised by 6.6 per cent. For example, petrol price raised by 7 per cent, catering prices by 2 per cent. Starting from May new natural gas tariffs are into force, which are higher by 18.1 per cent than previously. The International Monetary Fund is criticizing Latvian government’s indecisiveness in solving the problem of the inflation and requests to concretize the date for adopting Euro. At the moment the official date for transition to Euro is 2008, however the Bank of Latvia consider 2010 more realistic.
Dienas Bizness

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