Financial Services, Labour-market, Latvia, Taxation, Wages

"It will be a major challenge for Saeima members to decide next year what to do with at least 100,000 residents who have greater or lesser problems with their financial background and, as a result, want to be paid cash-in-hand. They prefer wages under the table, because some of their properties may be encumbered, they have liabilities, and so on. If we do not have a complex approach to this dimension, the fight against the shadow economy will be much, much harder. And that is something I would really like to see high on the parliament's agenda," said Bicevskis. Tackling the said problems is a responsibility of the Finance Ministry and Economics Ministry, and they have to come up with some innovative solution, he added.

The banking sector has several proposals to reduce the shadow economy and foster lending, for instance, by more successful measures against economic crime. Financial instruments and guarantees should be made more use of in underwriting also such business projects that do not use EU structural funds for their development, which is what Vilnius is doing to implement major infrastructure projects.

Bicevskis went on to say that public-private partnership projects should be encouraged, the law on alienation of property amended, and modern rent law drafted.

The banking sector is proposing a new program to help young specialists buy homes and help solve labor shortages, and believes that mortgage borrowers should be applied income tax breaks. Banks are also proposing making more services available online and improving bilateral data exchange between banks and government institutions.

Although banks' lending portfolio increased 2.4% in January-June as compared to the first half of 2015, the growth has been slower than in the other Baltic countries, said Bicevskis. The Finance Ministry's plan to achieve 10% growth in lending during the next ten years is overly ambitious - unless the banking sector's suggestions are taken into consideration.

Although the total amount of loans issued to households is increasing, lending to construction companies continues to decrease, added Bicevskis.

The Finance Ministry's representatives said that the banking sector's proposals had been received at the ministry, and the ministry was working on financial plans for the next three years - and many of the banking sector's initiatives could be taken into consideration.