Latvian economic outlooks: not very good

After resignation of Latvian government last Thursday financial groups are not very confident about investing money into Latvian market, since large governmental cuts are mostly likely to be postponed.

Standard&Poor’s have decreased country ranking to ‘BB+/B’ and removes it from CreditWatch negative. Citation from their official release:

“We believe the necessary process of private sector deleveraging is likely to continue over several years, during which time real incomes will decline, testing Latvia’s commitment to both its exchange rate regime and its obligations under the EUR7.5 billion assistance program from the IMF, EU, and other official lenders. The adjustment is made more difficult as external demand for Latvia’s key exports continues to decline.”

Let’s hope that this situation will not go any worse..

January update

It is hard for me to tell all recent stories from Riga as I spend January outside of Latvia for studying purposes. However, I compiled the most interesting news, that happened in last several weeks, in this article.

Bail-out approval from International Monetary Fund

On December 24 IMF agreed on the planned help to Latvia to overcome economical crisis that arrived by December, although majority of economists are worried about the future government steps. Prime minister Ivars Godmanis decided to keep the currency rate to Euro and cut the employees’ wages. More on the topic here at BBC.

Prime Minister Godmanis offered resignation as well, “if it helps the country”. Nothing happened yet, we will see – some political commentators already started their analysis. In Lithuania demonstrants decided to use eggs 🙂

Riots and demonstrations

Cutting wages in a very unpopular way how to manage problems. Majority of local citizens decided to repeat this information during a demonstration in Riga with about 10 000 people gathered at the Dome Square. Unfortunately this escaled into riots and fight with police, leaving about 40 injured. (BBC story here)

Further actions were cancelled, president Valdis Zatlers warned the Parliament and asked for earlier popular elections and two more constitutional changes. Parliament now has time until March 31. (full article here)

Language and nationalism quarrels

In these unstable times another question remained unanswered – the position of minorities in the country, especially the Russian speaking. According to surveys, about 400 000 people living in Latvia are called “non-residents”, they do not hold Latvian passport as exam from Latvian language is compulsory step towards obtaining it. More tension appears as Latvian nationalists in the Parliament turned down the notion that would enable non-residents take part in municipal elections. (article 1, article 2, article 3)

Minister of Culture Helena Demakova resigns due to health problems. Maybe the inability to respond to a argue over a commemoration plaque of Mussolini and Veiss could be reasons to speed up the decision.

Solutions for economical problems? Let somebody buy us!

Several attempts were made to offer Latvia for sale in internet auction servers as eBay or by online petitions. One of the groups appealed Russian multi-billionaire Roman Abramovich, some others asked the country of Sweden.

Swedbank, I like you

I needed a banking account to keep my scholarship, in Euros, only for certain amount of time. In the end I decided for Swedbank and I know I did not do a mistake.

At the beginning a lot of friends told me there is no reason to open a bank account in Latvia since all shops, major cafés and pubs accept cards. However, you still need some coins and/or banknotes for bus tickets or magazines (soon to be changed as well). I got an information that my scholarship will be given only in EUR which automatically took my Czech accounts out of play – they are in CZK and comission is imbursed for transfer from EUR.

I wanted to put my money into one of international banks (Latvian private bank Parex was taken over by state two weeks ago due to possibility of insolvency) so I went to local Swedbank branch. It took me 14 minutes to wait in queue and 16 minutes to have my account open. Altogether 7 signatures were needed (including a 3-page survey because I am considered non-resident). And what did I get?

  • multi-currency account
  • internet banking working immediately
  • debit card, in 2 days (!), first year for free, then for 14 EUR
  • possibility to have ISIC card with chip to serve as payment card also
  • withdrawals in local currency for free even if I don’t have LVL
  • same with payment in shops

I was very positively surprised by the speed of the card issuing and short time needed for opening the account itself, even without any online registration in advance. I can fully support choosing this bank for local keeping your money during stay in Latvia.

UPDATE 29.11.08: I got my payment card today, it’s embossed and obviously it is possible to pay through internet. Easy..

7 interesting facts about Latvia

There is a lot of information you might have heard or read about this country, but some of them are worth mentioning.

  1. Economy: Before addition of Romania and Bulgaria, Latvia had the lowest average salary in the EU despite its increase around 20-30% every year over past 3 years and is a member of EMR II. However, the average salary is still only 490 LVL (=700 EUR) and inflation rate is rising to some 16%. EDIT: (link)
  2. Demography: The population density in Latvia is 36 inhabitants per square km, which makes it at about the same level as Cameroon, Colombia or South Africa. EU-27 average is 112. (link)
  3. History: Just like Czech Republic and Slovakia celebrating independence of country that no longer exists, Latvia celebrates its independence from the year 1918, even though they were occupied by Germany and Soviet Union and became a separate country again in 1991. (link)
  4. History: Since Soviets invaded Latvia in 1941, groups of Latvians were fighting them together with Nazis and even built several monuments. Even though there was one of death camps built in Salaspils, near Riga, which is obviously not appreciated both by those who survived them and the EU. (link)
  5. Sports: Latvia has gained 17 olympic medals including two golds even though its short existence as independent state. The most recent is from newly introduced men’s BMX cycling race won by Maris Štrombergs. (link)
  6. Demography: In the years 2004 to 2007, about 25.000 Latvian working-age inhabitants left for Ireland and 35.000 for UK. That leaves Latvia with second highest emigration rate among countries that joined EU in 2004, around 2,5%. EDIT: (link)
  7. Economy: Latvian currency lat is one of the strongest in the world, since its exchange rate is 1 EUR = 0,705 LVL. (link)

Transport in Riga


International airport code: RIX
Major operating flight companies: airBaltic, EasyJet, Ryanair, Czech Airlines/click4sky

There is a direct bus No. 22 between the airport and city center, you should get off at the bus stop “Stockmann centrs”. The ticket costs 0,40 LVL and you can buy it directly on the bus from the conductor, which may also ask you for additional charge for your luggage, 0,80 LVL.

If you take bus 22a, it has different final stop – Esplanade. Prices are the same.

City transportation system

Riga is operated by buses, trams and trolleybuses. The tickets can be used only once, in news stands you may only buy tickets for trams and trolleybuses and then validate them in the vehicle. In buses there are conductors. A new system of electronic tickets/cards is being introduced, it will be used from March 1, 2009.

More information can be found at the Riga Transport (Rigas Satiksme) webpage:

Trains and inter-city buses

They both leave from terminal stations in the centre of the city, not far from each other and the “Stockmann centrs”. Trains are fairly cheap, 1-hour passenger train ride costs slightly above 1 LVL. Long-distance buses are more comfortable, but also more expensive. For example Ventspils – Riga is 4 hours by bus and costs 5,5 LVL.

Timetables and prices can be found at webpage: trains or buses

Car rentals

Renting a car is at reasonable prices compared to other countries. You can have your passenger car from 20 LVL/day. Just look at several companies and make a short search, majority of them speak English well.

Google query here.

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