Analytics, Budget, Economic History, Financial Services, Latvia

Last week, Dombrovskis pointed out that the crisis has taught Latvia several lessons. The introduction of the euro is a goal with clearly defined criteria. Expenditure cuts are better than tax hikes, while international aid must be sufficiently considerable to restore trust on international markets, even though some adjustments can be done gradually. Larger initial steps ensure better results, whilst governmental changes and different ruling coalition parties are surpassable if the country needs to carry out significant reforms, writes LETA.

Commenting on Latvia's further development and future challenges, Dombrovskis pointed out that it is necessary to implement strict fiscal discipline, ensure competitiveness and sustainable growth, conclude budget consolidation, limit inflation, combat shadow economy, reduce unemployment and introduce the euro in 2014.

As reported, on December 21, Latvia officially concluded its three-year international loan program, during which the country implemented stringent austerity measures to stabilize its finances after the economic downturn.

The final memorandum regulating the European Union's financial assistance was signed last Wednesday. The board of the International Monetary Fund (IMF) also supported the conclusion of Latvia's international loan program.

The European Commission's loan program will formally be concluded on January 20 of next year, because the commission's final loan installment will be received on this day, a month later than the final loan installment from the IMF.