Following today's meeting of the Financial Sector Development Council, Prime Minister Krišjānis Kariņš announced the decision to implement a substantial financial sector control reform and tasked the Ministers for Finance, Justice and the Interior with drawing up a legislative package by 26 March to be put to the Cabinet of Ministers.

On Tuesday, February 12, the government will review the report prepared by the Ministry of Finance on the fulfilment of the Financial Sector Development Plan for 2017 - 2019, as well as the changes to be introduced therein. It is important to note that, by the amendments to the Plan, it is intended to delete from the objective of the Plan the reference to Latvia as a regional financial services centre.

The Nordic and Baltic financial stability authorities have conducted a joint financial crisis management exercise. The exercise was held from 22 to 23 January 2019 and involved 31 authorities from Denmark, Estonia, Finland, Iceland, Latvia, Lithuania, Norway and Sweden as well as relevant European Union authorities. A staff member of the International Monetary Fund observed the simulation. 

Next year in Latvia will start with the technical or temporary budget. On December 6, the Saeima (Parliament), with a convincing majority of votes, have supported the amendments to the Law on Budget and Financial Management, providing for enhancement of the principles of preparation of temporary budget. Last time the temporary budget had been prepared for 2003, when Latvia had not yet joined the European Union (EU) and the European Economic and Monetary Union, and the medium-term budget planning had not yet been introduced, either.

On Tuesday, December 4, the Cabinet of Ministers (the Cabinet) reviewed the informative note prepared by the Ministry of Finance about the creation of the European Union (EU) funds support mechanism for attraction of financing for small and medium-sized enterprises (SMEs) in capital markets. To develop the capital market ecosystem in Latvia and facilitate the possibilities of attracting financing for the rapidly growing SMEs in public market via stock exchange, the financial mechanism has been developed, which would prevent the barriers for the enterprises to be listed in the stock exchange. Within the scope of the support measure, it is planned to provide support to at least five to ten enterprises each year, in order to carry out the stock listing or bond issue.

Despite the slowdown of growth rates in the largest sectors of Latvian national economy, in light of the successful development in other comparatively smaller sectors, the GDP growth in the third quarter has been even slightly steeper than in the first six months of the year in total, when the economy grew by 4.7%. Even though more detailed information about the economic sectors and the GDP allocation is not yet available, the operational data regarding port and railway performance results allow concluding that, on the whole, transport and storage sector has achieved much better results in the third quarter. In the third quarter of this year, the port cargo turnover has been by 18.7% larger than the year before, but the volume of cargos transported by rail has grown by 37.6%. Increase in the cargo transit volumes have been promoted by steeply growing Belarus cargo transportation, as well as the increase in coal cargo volumes from Russia, as the cargo flow to the Baltic Sea ports of Russia itself reduced during the period of repair works. Similar to previous quarters, also the number of passengers continue to grow steeply in the Riga Airport and the sea ports.

The Baltic states – Latvia, Estonia and Lithuania – are progressing with their effort to create a pan-Baltic capital market as the next step in raising their attractiveness to investors. A “Pan-Baltic Capital Market” conference at the EBRD in London today will reaffirm the three countries’ commitment to such a union by harmonising capital market regulations and dismantling investment barriers. At the same time the representatives of the three countries reiterated their commitment to fully meet all regulatory obligations according to the highest international standards and best practice. 

Today, 25 September, the government approved a comprehensive Action Plan on the recommendations included in Moneyval’s 5th round of evaluation of Latvia’s AML/CTF system. The plan merges existing initiatives and provides a robust framework for all government institutions involved, as well as the private sector, to implement reforms identified by Moneyval’s evaluation system.

On Friday, September 21, international credit rating agency S&P Global upgraded Latvia`s credit rating to ‘A’ from ‘A-’ and assigned stable rating outlook.