SSE.LT

… Current account has been balanced, inflation is falling back, foreign debt will not exceed 60% of GDP, which is a Maastricht criteria level… Our current account deficit is not in double digits… This is not because the overvalued currency, but because of huge lending… We just need to have more communication…

Latvian year to date trade deficit is  LVL -145mn including both goods and services. Its income balance (the rest part of current account) was LVL -300mn in 2008, and the last time it was positive in 2002. But mysteriously, income deficit reversed to a surplus this year! How? Why? What affects? Mr. Rimsevics, can you please communicate on this topic?

I can only guess that funds from European Commission to protect Lat were accounted as investment income in the current account of Latvia. According to the Bank of Latvia:

The current account shows exports and imports of goods and services, income and expense (wages and salaries, reinvested earnings, dividends, interest payments) as well as current transfers (EU funds, contributions to the EU budget, cash transfers of private persons, pensions, donations, taxes, etc).

Not to claim Mr. Rimsevics is hiding something, I am simply wondering how much of EU funds were included into current account since the beginning of the year. Why income from direct investment on a debit side becomes positive when it is supposed to be an outflow? Is it sustainable? My guess is “no”. Than, so much honored current account surplus is also a fake. Hope, somebody will communicate it to me and other wondering enthusiasts.

Meanwhile, there’s a  full interview dated today on CNBC with the head of the Bank of Latvia on the stage:

PS and yes, Mr. Rimsevics, nobody cares what is the capital of a country, until the country is famous for its people in science,  research, culture, sports. In case of Latvia, I mostly hear about its debates with neighbors, pension cuts, riots, minorities discrimination, money laundering, etc.