IMF: Continued reforms key to future growth

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The International Monetary Fund (IMF) said Tuesday that it expected the Latvian economy to carry on growing at reasonable pace but that continued reforms were essential to future prospects.

"Looking forward, growth is forecast to slow slightly in 2016 before picking up next year, led by exports and investment. The outlook is, however, subject to significant risks. Looking further ahead, higher productivity growth and robust competitiveness, along with a resumption of credit growth, will be needed to maintain the pace of convergence over the long-term. Continued reform will be key," the IMF said in presenting the preliminary findings of its annual examination of the economy, a so-called "Article IV Mission".

"Despite the current slowdown, growth is expected to pick up, but the timing is uncertain," the IMF warned.

"Sustaining stronger growth will require continued progress with ongoing reforms. Raising and sustaining growth over the medium term is feasible but will require further progress in structural reforms to promote investment, productivity growth, and continued strong competitiveness in the face of adverse demographics.

"Actions to address the grey economy will also be crucial," the IMF said.

Meanwhile over at the seat of the Latvian government, the Cabinet of Ministers building, precisely one of those reforms was being announced by Prime Minister Maris Kucinskis.

Flanked by Economics Minister Dana Reizniece-Ozola and Justice Minister Dzintars Rasnacs, Kucinskis unveiled plans to overhaul Latvia internal revenue or tax service, VID.

VID has a "reputational problem" and must stop acting "like a fox chasing its own tail," said Reizniece-Ozola as VID head Inara Petersone explained a series of short-term quick fixes and personnel changes that will then be supplemented with longer-lasting changes to VIDs structure and accountability which will require new legislation. 

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