Latvia’s economic recovery continued in Q2, with GDP growing quarter-on-quarter for the second consecutive quarter. Exports have so far been the main driver of the recovery, as expected, with Latvia benefiting from the recovery in the other EU countries as well as Russia.

The domestic economy is seen improving in the second half of the year, although consumption is likely to remain weak due to the still elevated unemployment, the tight credit markets and the weak income development.

Nevertheless, the improving consumer confidence indicates that domestic demand is on the recovery track as well. We see the economy returning to year-on-year growth in 2011 on improving exports and strengthening consumption, with growth gaining further momentum in 2012. However, it will take years for the economy to reach the levels seen a couple years back.

Latvia has currently no need to draw all the available funds from the international loan package, which stabilises confidence in the economy. Latvia has already accumulated some reserves from the loan but retains the option of drawing more funds if the economy deteriorates further.

The stability of the government finances has taken the pressure off the currency as well as the government. In the second half of the year the main event is the parliamentary elections in early October. The party of the current PM is doing relatively well in the opinion polls despite the tough austerity measures already taken. In addition, the likely lack of unpopular decisions to improve state finances before the elections coupled with the strengthening recovery could boost support further. The new government will formulate the 2011 budget, but with the economy on a recovery track the government is expected to try to continue cutting the deficit as planned over the next couple of years.

After an official greeting at the Prague Castle, President Zatlers met with Czech President Václav Klaus to discuss the bilateral relationship between the two countries. The two presidents exchanged views about the economic situation in Europe and shared information about how their countries have sought to overcome the economic crisis. President Zatlers pointed to the need to think about future development in this process: “The durability and sustainability of our country’s development will depend on how wisely we act when economic recovery begins,” he said.

The two leaders also discussed strategic security, the NATO mission in Afghanistan, as well as preparations for this November’s NATO summit. They spoke about the need to work together with the United States in pursuit of Transatlantic security. President Zatlers and President Klaus also discussed regional partnership issues. The Latvian president particularly emphasised Latvia’s role in the European Union’s Eastern Partnership programme.

Later, President Zatlers met with the speaker of the Czech House of Representatives, Miroslava Nĕmcová to discuss partnership between the two countries in the fields of education and culture. President Zatlers said that if there are strong foundations of co-operation in these two areas, then it becomes easier to develop economic contacts, as well.

President Zatlers and Speaker Nĕmcová also discussed constitutional law in terms of the foundations of a parliamentary system, shortcomings therein, and possible constitutional changes in this regard.

President Zatlers also met with the Lord Mayor of Prague, Pavel Bém, today and toured City Hall in the Czech capital.

From there, the President attended the opening of an exhibition called “The Baltic Way that Moved the World,” which was also attended by Latvians who live in Prague. President Zatlers told the gathering that the Prague Spring and the Baltic Way had a similar effect on the ability of people to see the value of human rights and freedoms. Indeed, both inspired people to fight for freedom.

First Lady Zatlere, for her part, met with Czech First Lady Livia Klausová and toured the Prague Castle and Cathedral.

In the evening, Latvia’s First Couple attended a state banquet organised by the Czech President and First Lady in their honour.

Joseph Daul, Chairman of the European People’s Party (EPP) Group in the European Parliament (EP), has a high opinion of Prime Minister Valdis Dombrovskis (New Era) and the entire Latvia because, thanks to the ongoing reforms, Latvia is now on the right track, and a step ahead of other European Union member states, Daul said.

At a press conference today, where the EPP was to report on the results of its meeting in Riga, Daul stressed that Latvia had done very much to exit the crisis, and that other EU member states should follow Latvia’s example, writes LETA.

Daul also thanked the Latvian nation for not taking to the streets, as it would have probably happened in France, for instance.

Daul repeatedly praised Dombrovskis, characterizing him as a calm and composed person, and wished him every success in the upcoming Saeima elections.

Dombrovskis also said at the press conference that some things from Latvia’s experience of dealing with the crisis could be useful for other countries.

Latvia’s MEP Krisjanis Karins (New Era) said that Dombrovskis’ decisions had been right, because they produced positive results and halted the economic downturn in Latvia.

That is why people should vote for a prime minister who has proven himself, and a prime minister who has the EU’s backing – to vote for other candidates would be voting for the unknown, said Karins.

In Karins’ opinion, other political parties in Latvia make many populist statements and speak about very important matters in a very general manner, whereas Dombrovskis talks frankly and precisely about what the current situation is and what he plans to do in the future.

As reported, the “Radisson Blue Daugava” hotel in Riga for two days hosted a meeting of the EPP, the EP’s largest political group, to discuss the effects of the economic crisis and the lessons provided by Latvia for Europe on how to overcome the crisis and stabilize the economy.

Leading members of the EPP group in the EP attended, as well as EU Commissioner for Energy Gunther Oettinger, Commissioner for Development Andris Piebalgs, Dombrovskis, Economy Minister Artis Kampars(New Era), Unity Chairman Girts Valdis Kristovskis and Co-chairwoman Solvita Aboltina, Latvian MEPsSandra Kalniete (Civic Union), Karins and Inese Vaidere (Civic Union), as well as various experts and economic analysts.

According to operative data of the Treasury on the state budget execution in August the state basic budget revenue was 204.7 million lats, but expenditure reached 194.4 million lats making financial surplus – 10.2 million lats. In August, state special budget revenue reached 92.4 million lats, expenditure – 121.6 million lats making financial deficit in amount of 29.2 million lats. State consolidated budget surplus in August was 18.9 million lats. However state budget deficit in eight months of the year was 257.2 million lats.

The state basic budget revenue administered by the SRS (excluding personal income tax and natural resource tax which are divided between the state basic budget and local government budgets) was 137.6 million lats or 101 % against the plan. State social security contributions (together with deductions for the second level pension investment plans) were 96 million lats making 99.5% of the plan. In total, revenue administered by the SRS in August reached ~99 % of the plan.

In August, corporate income tax revenue was 10.9 million lats or 182 % of the plan, but the value added tax revenue was 70.7 million lats or 19.4 % above the plan.

43 million lats were collected from the excise duty which is 1 % above the plan. In August, excise duty revenue from tobacco exceeded the plan by 9.6 % and was 10 million lats, because tobacco product sellers made larger contributions to the budget. Excise duty on oil products was collected in amount of 102 %. However excise duty revenue from alcoholic beverages was 12.8 % below the plan.

In July revenue from the tax on cars and motorcycles exceeded the plan by 51.1 %, as well as customs duty exceeded the plan by 35.8 %.

In addition, the Ministry of Finance informs that in August personal income tax (PIT) revenue in eight months of the year was 95.39 % of the forecast for this period, inter alia the execution of the Treasury’s appropriation account (from which all local governments receive revenue) was 95.6 %. Riga local government directly collected 95.15 %; however Ventspils local government collected 92.56 %. Therefore there will be no need to compensate uncollected share of PIT revenue forecast.

Yet Rigas history is not its only attraction. Its reputation as the liveliest of the Baltic capitals is well deserved. Its bars and clubs are filled seven nights a week. Start your night at the eccentric Mi6 (Spy Bar) for its strong cocktails and Bond films. Then head to the Skyline Bar, where you can take in view from a window seat 26 floors up. For evening entertainment, head to Pulkvedim Neviens Neraksta. This nightclub provides edgy music on two levels without pretentious clientele or expensive entry.

The most spoken languages are Latvian and Russian. There is also no problem with English and German, because these are most often learned foreign languages a school. I am a native Russian speaker, so I didn’t have any difficulties because Latvia is one of the former Soviet Union members. But I’ve seen a lot of visitors talking English with the natives on the streets. There are lots of excursions and guided tours around Riga and other cities. Most of them are hold in English, but I’ve seen also German-speaking guides. These are mostly beautiful young ladies, sometimes dressed in national outfits and accompanied by several actors, performing some scenes from the medieval times of this land. Wherever people go, they look for something different and relaxing which is not available in their home town. And in most cases, they seek a beach resort or at least a seaside place to chill out in. Jurmala is one of those beach resorts, which is popular amidst tourists. They come here to put their feet up, relax and relax, breaking away from their daily routine.

The beach is wide in Jurmala and is being quite good looked after by the local services. And it ends with pine trees sometimes growing at sand dunes. When you take a short-distance train from Riga to Jurmala you will see beautiful forests with occasional sand dunes. The coastline is a very long one and in it’s central part there is a street named Jomas. There are lots of interesting establishments to visit and also simply to have a walk.

Over the years Latvia has been many things: an independent Baltic state reliant on agriculture, a small part of the dominant Soviet Union, a vibrant business centre as part of the EU, and – more recently – a country in economic crisis (or stag-do central, depending on your level of interest in current affairs).  Understandably, it is a place that is often misunderstood by the rest of the world. When Said Business School carried out research into people’s perceptions of it in 2003, they found that many had negative associations, such as corruption, and for many others it simply wasn’t even on their radar (“Latvia? Don’t know much about Latvia, I’m afraid”).

In reality, Latvia is a country rich in many things: culture, natural beauty, and perhaps most importantly, overwhelming optimism. Latvia has periodically been felled by war and economic instability, not least the recent credit crunch. And each time the population has responded with remarkable resilience and embraced the chance to create new opportunities. There is no self-pity – happiness is what hits you when you step off the plane in Riga. Which is what makes their latest national branding effort, the Latvian pavilion at the World EXPO 2010, so apt.

The pavilion is called the Technology of Happiness and consists of a huge multicoloured tower containing a wind tunnel where willing volunteers fly up and down to the excited gasps of the watching crowds. It is a neat way to demonstrate physically how happiness “lifts you up”  (as per the explanation on their website). The idea and the colourful identity created to support it are ambitious, irreverent and full of imagination – and judging by the big smiles on the faces of all those involved it managed to spread a little happiness. Which are all great things to associate with Latvia.

As part of a wider brand campaign to elevate Latvia away from negative perceptions the pavilion is an important step. It taps into the irrepressible spirit of Latvians and created an experience to remember for all those who visited. However, the installation is already 3 months in to 6 month lifespan, after which it will drop from public consciousness. The question is, can the positive perceptions of Latvia live longer?

The Technology of Happiness is a successful building block for a new, positive nation brand because it puts something real in the world – letting people take part, not just plying them with information. People believe not what you say, but what you do. At Wolff Olins, we believe that the best brands, the ones that help businesses grow and nations flourish, are the ones that do new. New experiences, new services, new ways to collaborate. To make a lasting impact in people’s minds, therefore, Latvia must take this success and keep doing new. People need further reasons to believe that Latvia is unique and intriguing, leveraging all that they have to offer, including their optimism and enthusiasm for life.

We look forward to seeing what they do next.

(Amy Norman)

The sides, with respect to rapprochement with the EU, noted that Georgia and the EU signed the agreement on the simplified visa regime and that after completion of the relevant procedures the agreement on readmission between Georgia and the EU will be concluded. The negotiations over the agreement on the common aviation space between Georgia and EU have been completed. The bilateral Agreement for protection of agricultural products and their respective “Geographical Indications” was initialed, which will promote growth of trade turnover in the field of agriculture between Georgia and the EU. The sides underlined the importance of commencement of negotiations over the association agreement with a free and comprehensive free trade component between Georgia and the EU and Latvia’s support in this regard.

During the meeting, the sides laid special stress on the importance of participation of Georgia in the International Security Assistance Force (ISAF) operations in Afghanistan under aegis of NATO.

Grigol Vashadze provided Maris Riekstins with the comprehensive information on the economic reforms in Georgia and expressed his hope that the particular relations existing between the two states will strengthen in future as well.

In February 2010, the Cabinet of Ministers approved a schedule for drafting the state budget for 2011 envisaging that that government shall submit draft budget for the next year to the Parliament according to the Law on Budget and Finance Management, namely, no later than four months after the newly elected Saeima gives the Cabinet of Ministers a vote of confidence.

Currently the Ministry of Finance in cooperation with international and domestic partners has developed medium-term macroeconomic development forecasts envisaging 3.5% increase in the gross domestic product in 2011. Quick GDP assessment of the second quarter of 2010 shows that the economy has slightly improved in two subsequent quarters comparing with previous period. It proves that the Latvian economy gradually recovers from the recession and gives a hope for further gradual economic improvement.

However, undoubtedly, data on the Latvian economy development in the third quarter of this year will be decisive in the state budget for 2011 drafting process and will show the sustainability of economic recovery process. Then it will be possible to forecast economic growth rate in 2011 more precisely. However the GDP growth rate will determine tax revenue forecasts for the next year, and only after that it will be possible to specify necessary amount of budget consolidation to reach the defined goal – in 2011 general government budget deficit should not exceed 6% of GDP according to ESA methodology.

When base forecasts will be approved – economic growth rate in 2011 and tax revenue amount, it will be possible to specify the amount of necessary consolidation. Current estimates and agreements with lenders show that necessary consolidation amount in 2011 could be 392-440 million lats, but this number will be specified.

The consolidation may be reached in two ways – by increasing revenue and decreasing expenditure. The Ministry of Finance works at proposals for the government in both directions – in terms of revenue increase (shadow economy combating plan measures, tax policy guidelines and possible tax changes) and in terms of expenditure cuts (evaluation of public functions, structural reforms, recommendations of foreign experts).

The Ministry of Finance considers that the consolidation has to be done by balancing revenue increase and expenditure cuts, therefore possible state budget expenditure reduction in 2011 could be 100-200 million lats. As it was said before, the number will be specified after economic development data of the third quarter will be received.

The government will continue intensive work at the detailed list of consolidation measures for 2011 which will exceed the necessary consolidation amount in order to let the newly elected Parliament and the Cabinet of Ministers which will be given a vote of confidence to take immediately qualitative, deliberative and weighted decisions.

Most of the annual festival’s major events will take place at 11. novembra krastmala (on the right bank of the river), in the Old Town and in Vērmanes dārzs, the lovely park created by Anna Wöhrmann in the early 19th century.

This years’ City Festival will also stage events elsewhere in central Riga as well as in outlying neighbourhoods. As always, the festival will take place in the streets and squares, on the water and in the air – as well as in Riga’s museums, concert halls, and cultural centres. Everyone in the city will be able to find events that are perfect for them, whether they are younger or older, looking for active recreation or wanting only to relax and watch.

Details on the events will be available in August at www.rigassvetki.lv
On August 21st and 22nd, public transport will be free of charge for residents and visitors alike!

The Riga City Council is organizing this year’s City Festival in cooperation with the Freeport of Riga. Celebrating the 810th anniversary of the founding of Riga’s port, the Freeport will stage events on the water – in both the Daugava River and the canal that circles the Old Town – as well as elsewhere in the city.

Silver coin
Face value: 1 lats
Weight: 31.47 g, diameter: 38.61 mm
Metal: silver of .925 fineness; quality: proof
Struck in 2010 by Rahapaja Oy (Finland).
Artists: Arvids Priedite (graphic design), Ligita Franckevica (plaster model).

Cupro-nickel coin
Face value: 1 lats
Weight: 12.40 g, diameter: 30.00 mm
Metal: cupro-nickel; quality: BU
Struck in 2010 by Rahapaja Oy (Finland).
Artists: Arvids Priedite (graphic design), Ligita Franckevica (plaster model).

Obverse

The obverse of the coin depicts a scene of Latvian peasant children mastering the first reading skills. The lower part features an inscription LATS with a number 1 in the middle. The year 2010 is arranged above the inscription, to the right.

Reverse

There is a reproduction of a rooster from the oldest known Latvian ABC book in the centre, an inscription ABC arranged in a semi-circle to the left and an inscription “Latviesu abece” in stylised gothic letters in a semi-circle to the right.

Edge

Inscriptions LATVIJAS BANKA (Bank of Latvia) and LATVIJAS REPUBLIKA (Republic of Latvia), separated by rhombic dots.

Education begins with learning to read. Reading skills are based on our very first book, the ABC, which explains the relationship between letters and sounds. In ancient Rome and Greece, reading skills were acquired by reading literary texts while the Medieval Europe used religious texts, that were consolidated in a basic set of religious readings, the so called catechism, in the 15th and 16th centuries. The catechism Latvian translations of late 16th century served as ABC books. The first printed ABC books in Europe appeared at the end of the 15th century, and the first Latin ABCs printed in Riga were made at the end of the 16th century.

The first authors of Latvian ABC books were German Lutheran ministers, with the greatest contribution from the Alūksne minister Ernst Glück (1652-1705) and Sunākste minister Gotthard Friedrich Stender (1714-1796). The ABCs with pieces of catechism texts for reading were later replaced by a more practical solution: each letter of the alphabet was accompanied by an illustration and a didactic secular text. The first ABCs in Latvian were printed in Riga in the 1680s, with two printing shops publishing at least six editions of ABCs by the end of the century. The Riga City printing shop, managed by George Matthias Nöller (?-1712), competed with the so-called royal printing shop which, implementing the educational policy of Sweden, was established and supervised by Johann Fischer (1633-1705), General Superintendent of Vidzeme, in 1675 and managed by Johann George Wilcken (?-1701). Most probably it is in the latter printing shop that the first Latvian ABC book was printed around 1683: a fragment of it in the form of uncut sheets was found at the library of the University of Tartu in 1941. It bears an image of a proud rooster symbolising the light of dawn and knowledge. As to the scope and display, this ABC book is similar to the first ABC printed in Swedish in 1660 which was also decorated with the image of a rooster. The oldest known ABC books bearing an image of a rooster were the German ABC printed in Frankfurt around 1575 and the Polish ABC printed in Königsberg in 1578. A bird with a strong beak and a large comb is standing on a small platform, wearing three ribbons over its breast. It seems that its picture has been drawn, taking a rooster on a church spire as a model, and the three ribbons symbolise the rooster’s three crows (the first, the second and the third crow).

In the 18th and 19th centuries, the development of Latvian ABC books was influenced by German ABC books; as of the second half of the 19th century, Russian ABCs also left their impact. One could see that the religious texts were replaced with pieces of secular readings, a trend observed in Germany. Illustrations were introduced for each letter of the alphabet, samples of written letters and basis of doing sums, later didactic stories, poems and short popular-science texts on geography, history and natural sciences were added to compile reading-books. The most outstanding ABC and reading-books were developed by Latvian teachers at the end of the 19th century and the first decades of the 20th century. Since the end of the 19th century, the technique of zincography made it possible to insert a lot of colour illustrations in these publications.

For centuries, the ABC book enjoyed a special status in Latvia. This picture book that serves as a bridge between generations has become more attractive over time, so that the launch of the journey represented by reading would be filled with joy and pleasure and each letter would be considered a welcome guest. To this end, the Latvian editions of the ABC book have been illustrated by outstanding Latvian artists. The total number of ABCs in Latvian is close to 200, and together with reprints and updated publications their number exceeds 300.

To pay its respects to the history of Latvian learning, the Bank of Latvia dedicates a coin to the ABC book, the reverse of which features the rooster from the oldest known Latvian ABC book.