Analytics, Budget, Employment, EU – Baltic States, Financial Services, Latvia, Legislation

Although growth has resumed following the financial crisis, Latvia should accelerate reforms to improve growth potential, notes the Commission.

Regarding the structuring of the budget, the Commission recommends that Latvia implement its budgetary plans to timely correct excessive budget deficits and achieve sufficient progress regarding medium-term budget goals. Ratification of the so-called fiscal discipline treaty would make it easier for Latvia to observe this recommendation, writes LETA.

The European Commission believes that Latvia should shift the tax burden from labor taxes onto consumption, property, natural and other resources. Brussels recommends Latvia to pass the fiscal discipline treaty and to develop a medium-term budget. The Commission also recommends resuming compulsory contributions to the private pension scheme.

The Commission urges Latvia to reduce long-term and youth unemployment. The measures should be targeted at the prevention of school drop-out cases, more efficient development of new jobs.

As for the social system, the Commission recommends measures reducing poverty and social exclusion, reforms to the social aid system to make it more efficient and better protect the poor. The Commission wishes that the social aid system in Latvia better reaches the target audiences and encourages people to work, not receive benefits.

Brussels also wishes that Latvia improves energy efficiency, offering stimuli for reducing energy costs and shifting consumption to energy-efficient solutions. The Commission recommends fostering competition in electricity, natural gas, heating distribution networks, and improving connections to the EU energy networks.

The Commission suggests that measures must be taken to improve court administration and transparency in court proceedings, paying particular attention to incomplete cases and case review duration. The insolvency procedures and mediation laws also need to be improved.

The EU recommends continuing reforms in higher education, as well as developing and implementing efficient research and innovations policy.

The EU leaders will discuss and endorse the Commission's recommendations at a meeting on June 28 and 29.

Although the Commission's recommendations are not binding on the member states, a failure to observe the recommendations may have an effect on distribution of the EU funds in the future.