OECD recommendations for the growth of the Latvian economy in many places coincide with the domestic assessment / Article

Today, 7:56 am

Authors:
Daina Zalamane (Radio of Latvia)

OECD unites 38 of the world’s most developed countries, including 22 members of the European Union. Latvia joined the OECD eight years ago and since then receives recommendations for economic development every two years. Dace Zīle, head of the Analytical Service of the Ministry of Economy, emphasized that the OECD’s conclusions on the main obstacles and opportunities for Latvia’s competitiveness and growth coincide with the positions of the Ministry of Economy and the government.

“There have been various challenges, and we as Latvia have successfully overcome them and managed to find solutions to ensure macroeconomic stability,” said Zīle. “Of course, at the same time, it must be recognized that our society has grown in long-term needs and the need for additional public funding for various needs – for security, defense, health care, social and infrastructure development services. Therefore

Not for the first time, the OECD recommends that Latvia revise its tax policy.

The availability of labor is also mentioned as one of the big issues, where the effective involvement of existing people in the labor market plays an increasingly important role. In particular, the need to promote the involvement of women in highly paid positions should be emphasized, and labor immigration should be left only as a solution in cases of shortage of highly qualified skills.”

Bank of Latvia economist Kārlis Vilerts assesses that we lag behind neighboring countries in terms of investment attraction.

“If in 2011, loans to the economy were measured at around 90% of the gross domestic product, then at the beginning of this year they are about 27%. Then the OECD also provides recommendations on what should be done,” Willerts said. “One is promoting the availability of information, that is, for both households and companies about the services provided by banks and their prices. For example, the Bank of Latvia publishes deposit interest rates on its website so that citizens can see where it is more profitable for them to keep their funds. The second thing, of course, in order to promote the availability of credit services, we have already done this at the beginning of the year, that is, the promotion of borrowers’ mobility between banks cost reduction would also be introduced on the company side.”

Jānis Endziņš, chairman of the board of the Latvian Chamber of Commerce and Industry (LTRK), says that

businessmen and OECD experts agree on the reduction of labor taxes for low- and middle-income residents.

In order to compensate for this, the OECD is encouraging an increase in real estate and income taxes. Reforms in the public sector are also needed.

“In general, the public sector has problems with personnel. This naturally also affects the quality and efficiency of their work, and we actually need quite significant reforms there to reorient the public administration as a whole from such a process and assessment of compliance to direct goals and results,” Endzins pointed out. “And the other –

The OECD has recognized that there is little or no pre- and post-policy evaluation,

because in a different way we find some problem, we think that it could be resolved, but we do not evaluate again after some time whether we achieved that result or not. In the OECD, we pay a sufficiently large membership fee. The goal is not simply to be in the club of the richest countries, but the great opportunity is to use these recommendations of OECD experts so that we live better overall.”

The main objectives of the OECD are to promote the economic development of countries, financial stability and raising the standard of living.