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Latvian report
by Euro Reporter
2013-11-07 10:51:36
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Bank of Latvia issues "Parity Coin"

November 6, the Bank of Latvia will issue a new special one-lat circulation coin, the "Parity Coin", featuring the exchange rate of the lats to the euro on the reverse. The new coin will be legal tender in Latvia. The coins will be put into circulation like any other circulation money, reaching commercial and other enterprises as well as population through banks. The coin has been designed by Ilmars Blumbergs and the model made by Janis Strupulis. The new one-lat coins are struck at Munze Osterreich (Austria).

The Bank of Latvia commenced minting special one-lat circulation coins twelve years ago, and the "Parity Coin" concludes the cycle. As of January 1 next year, Latvia will introduce the euro and become a full-fledged member of the Economic and Monetary Union; nevertheless, the tradition to issue special circulation coins will continue. A coin with an image of a stork opened the series, and since 2004 a new coin to mark a special occasion has been put into circulation twice a year. The "Parity Coin" is the 23rd special one-lat circulation coin.

The central motif of the "Parity Coin" resembles a tree trunk keeping roots and branches, the earth and the sky together. It symbolizes a road leading to new challenges, dreams and opportunities. The reverse of the new coin shows a symmetrical mirror image of numeral "1", a component of the inscription "1 LATS" and "1,42 EIRO". The obverse displays the number 2013, the year of minting, below the coat of arms of the Republic of Latvia. In terms of edge, size, metal or weight, there are no other distinctive features between the new coin and its other one-lat circulation counterparts. The total circulation of the coin is 500,000, and, like all other special one-lat circulation coins, it will not be supplemented.


Latvia still wants to spend more than it earns

Latvia has proven that fiscal discipline and growth do not exclude, but complement each other; Prime Minister Valdis Dombrovskis (Unity) said addressing the parliament. Commenting on proposals for the 2014 state budget and related bills, the premier said it was obvious that Latvia still wanted to spend more than it was earning, and the number of budget proposals this year was much higher than usually.

Dombrovskis reminded that the priorities in next year's budget included reducing social inequality by introducing larger tax breaks for low-income residents and families with children, tackling demographic problems, including higher support for young parents, and continuing measures against the shadow economy.

The additional budget expenditures must be covered by additional revenue, said Dombrovskis. Several tax revenue projections have been raised, as well as the amount of expected dividends from government-run companies. In conclusion, Dombrovskis urged Saeima members to support the 2014 budget and the related bills in the final reading today.


Latvia eurozone entry to cement shift away from Russia

The eurozone's next entrant, Latvia, will push for tight budgets, labour reforms and free trade deals when it joins the bloc next year, Prime Minister Valdis Dombrovskis said. Latvia's euro entry in January cements its shift away from Russia, two decades after the collapse of the Soviet Union. Dombrovskis said in an interview that he feared Moscow was trying to flex military and trade muscles in the Baltic. Latvia is joining the bloc proud of the strong economic growth and relatively low debt levels it has achieved after undergoing a deep recession during the global credit crisis when it slashed spending to keep its currency pegged to the euro. Its Baltic neighbour and euro member Estonia has been a vocal critic of bailouts of euro economies such as Greece and has often sided with a northern bloc including Germany and Finland that has insisted on tough bailout terms. "The main point is that quite a few measures already have been taken by the eurozone to strengthen both fiscal discipline and economic governance," Dombrovskis said last month.

"Now it is important that those initiatives are followed through and fiscal discipline is actually ensured. I believe Latvia will be the voice in favour of actually following all the rules," he added. Latvia's emergence from its 2008-09 crisis is what the European Union hopes to see in southern European countries now wrestling with recession and debt. At 40 percent of economic output in 2012, Latvia's debt was less than half the eurozone average. Latvia will use euro notes and coins from Jan. 1, 2014, hoping entry to the currency bloc of 330 million people will help trade and attract investment. Fellow Baltic nation Estonia joined in 2011, and Lithuania is expected to follow in 2015. "Competitiveness is probably the key issue the core EU needs to deal with, including full utilization of the EU internal markets," Dombrovskis said, adding a number of countries needed to make their labour markets more efficient. "Fiscal discipline is important. But unless you deal with competitiveness factors you will not be able to ensure sustainable growth."

He said Latvia would push the EU to cut red tape and make free trade deals with the U.S. and Japan but would not say whether Latvia would support further moves towards a banking union, which has hit a stumbling block over how to pay for closing or salvaging failed banks. Russia suspended imports of dairy products from neighbouring Lithuania this month, weeks before the small Baltic state hosts an EU summit. Russia and Belarus also held one of their largest military exercises in recent years near Latvia's border last month. "Certainly we are following [events] with concern," Dombrovskis said. "As regards relations between Russia and the Baltic states, if you look at the last 20 years or more you actually see relations have been quite bumpy." Of the 15 former republics that became independent states when the Soviet Union disintegrated in 1991, only Lithuania, Latvia and Estonia have joined the EU. "Certainly there are added concerns that we see increased intensity and scale of Russian military maneuver on our borders," Dombrovskis said.

"Russia tends to become more assertive with its neighbours. We see it in Ukraine … we see it in certain actions to Baltic states," he added. A Latvian state commission to calculate the damage wrought on the former communist republic by the Soviet occupation has had its funding renewed by the Latvian government, Interfax reported Tuesday.  The commission has been inactive since August 2009, when the government sacrificed its financing as part of an effort to cut budget spending by 500 million lats ($958 million) in the aftermath of the 2008 financial crisis.  Latvia was occupied by the Soviet Union in 1940, a year after the Molotov-Ribbentrop pact divided up north-eastern Europe between the Soviets and the Nazis. The country regained its independence in 1991, and in the following two decades has oriented itself westwards, joining both the European Union and NATO.


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