Latvia lags behind Estonia and Lithuania in the development of the capital market by five years, says INVL – BNN

Latvia has lagged behind Estonia and Lithuania by about five years in the development of the capital market, Andrejs Martinovs, chairman of the board of the asset management company INVL Asset Management, admitted in an interview with LETA agency.

The data of the Bank of Latvia show that the pension capital accumulated in the investment plans of the state-funded pension scheme, or pension level 2, increased by 24.4% last year, amounting to 7.06 billion euros at the end of the year, but only 8.5 billion were invested in Latvian assets from pension fund funds. %.

Martinovs pointed out that this is largely related to the size of Latvia’s capital market relative to gross domestic product (GDP), which is one of the lowest in Europe and OECD countries. Although there have been some improvements compared to the situation ten or even five years ago, the problem as such is still not solved.

“Yes, there has been growth in the capital markets, but if we compare it with more than seven billion euros, which is the second level of pensions, then it is not enough.

Therefore, if you answer the question whether 8.5% of investments in Latvia is enough, then it is not much, and I, as a local pension manager, would definitely like to have more. But if we maintain the same proportion or achieve a small increase, it will already be a good result, because the money in the pension system increases and this rate is much higher than the growth of investment opportunities in Latvia,” Martinov described the situation.

Commenting on the fact that even after the government’s review of the report of the Ministry of Finance on the inclusion of state and local government companies in the capital markets, specific decisions have not been made, the head of “INVL Asset Management” admitted that from the point of view of the progress of the process, criticism can certainly be expressed, as it should finally move forward.

At the same time, he pointed out that, on the other hand, you can also understand politicians, because there are still a lot of myths and stereotypes in society, which are based on the privatization process of the 90s. Therefore, it is very difficult for politicians to be decisive, and the reluctance to talk about it out loud is also understandable.

“However, as I have already said, we are at least five years behind our neighboring countries in the development of the capital market, and in order to even catch up with them and be at the common development level of the Baltics, these things must be sorted out as soon as possible. We will benefit not only from the fact that state and local government companies will have the opportunity to attract alternative financing when they go public, not only from the fact that pension fund managers will have additional opportunities to invest in local assets, but also from this will benefit the management of these companies, because currently many companies are not managed qualitatively,” said Martinov.

As for the management of state-owned enterprises, he also criticized the proposal of the government-forming coalition that civil servants will be able to combine the position with only one other position in the boards and councils of capital companies.

Martinov stated that it is not clear who, as a result of these changes, will end up on the councils and boards of state-owned enterprises – whether they will be business professionals or simply other civil servants who were not previously appointed to them because they had lower qualifications than those who worked in several administrative institutions.

“My general opinion is that civil servants have nothing to do in company councils. In my opinion, everyone should do their job, and civil servants should work in their field of activity, but people whose professional qualifications are related to business should work in company councils,” said Martinov.

“INVL Asset Management” is a manager of alternative assets in the Baltic States and is part of the “Invalda INVL” group.

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