Bloomberg News

Latvia’s Forecast for 2012 GDP ‘Too Optimistic,’ Rimsevics Says

December 06, 2011

Dec. 6 (Bloomberg) -- Latvia’s estimate for 2.5 percent economic growth next year is “too optimistic” because conditions in the euro area are deteriorating, said central bank Governor Ilmars Rimsevics said.

“This estimate is too optimistic and means that at the time when the budget estimate was accepted, Europe was in one situation and three months later the situation has worsened,” Rimsevics said today on Latvian Television program 900 Seconds. “We have to be ready no later than at the beginning of next year to look at what else we can do.”

Rimsevics’ concern puts him at odds with Finance Minister Andris Vilks, who said yesterday at a news conference that the forecast was “very conservative.” The government yesterday submitted the 2012 budget to parliament, its last under a 7.5 billion-euro ($10 billion) loan program from a group led by the European Union and the International Monetary Fund.

The Baltic country plans to cut its deficit to 2.5 percent of gross domestic product next year so it can adopt the euro in 2014.

Latvia will have passed spending cuts and tax increases of 2.3 billion lati ($4.4 billion), or 17.8 percent of GDP, since 2008, when it sought its international loan, Vilks said yesterday.

--Editor: Alan Crosby

To contact the reporter on this story: Aaron Eglitis in Riga at aeglitis@bloomberg.net

To contact the editor responsible for this story: Balazs Penz at bpenz@bloomberg.net


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