WORLD TRADE
ORGANIZATIONWT/L/421/Rev.1∗
10 October 2001
(01-4916)
Original:  English
REPORT ON THE ECONOMIC DEVELOPMENT OF LATVIA
Communication from Latvia
Revision
With reference to the commitments containe d in the Report of the Working Party on the
Accession of Latvia to the WTO (WT/ACC/LVA/32), a report on the economic development of
Latvia has been received from the Permanent Mission of Latvia. The table of contents is reproduced
hereunder.  The report is available in electronic format upon request from accessions@wto.org.
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∗ In English onlyWT/L/421/Rev.1
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TABLE OF CONTENTS
Abbrevia tions ................................................................................................................. ................................................................................ 6
1. National Econom y: Brief Overview ........................................................................................... ............................................................. 7
1.1. Macroeconomi c Development ................................................................................................ .......................................................... 7
1.2. Economic  policy .......................................................................................................... ..................................................................... 11
2. External Econom ic Environment .............................................................................................. .............................................................. 13
3. Economic and So cial Development ............................................................................................ ............................................................. 17
3.1. Gross Domestic Product ................................................................................................... ................................................................ 17
3.1.1. Development Tr ends and Structure ....................................................................................... .............................................. 17
3.1.2. Forecasts .............................................................................................................. ............................................................... 19
3.2. Prices ................................................................................................................... ............................................................................. 21
3.2.1. Consum er Prices ........................................................................................................ ......................................................... 21
3.2.2. Producer Prices, Construc tion and Foreign Trade Prices ................................................................. .................................... 23
3.3. Balance of Payments and Foreign Tr ade Turnover ........................................................................... ................................................ 25
3.3.1. Balance of Payments .................................................................................................... ....................................................... 25
3.3.2. Foreign Trade by Groups of Commodities and Countries ................................................................... ............................... . 27
3.3.3. Export and Im port of Services .......................................................................................... ................................................... 31
3.3.4. Foreign Trade Policy ................................................................................................... ........................................................ 32
3.4. Investments .............................................................................................................. ........................................................................ 38
3.4.1. Capital an d Investment ................................................................................................. ....................................................... 38
3.4.2. Public Inve stment Program .............................................................................................. ................................................... 40
3.4.3. Foreign Dire ct Investment .............................................................................................. ..................................................... 44
3.5. Monetary Development and the Exchange Rate ............................................................................... ................................................ 47
3.5.1. Monetary Policy, Bankin g System and Stock Market ....................................................................... .................................. 47
3.5.2. Monetary Indicators of th e Banking System of Latvia .................................................................... .................................... 48
3.5.3. Interest Rates on Deposits and Credits ................................................................................. ............................................... 51
3.5.4. Exchange Rate and Foreign Re serves of the Bank of Latvia ............................................................... ................................ 52
3.6. Fiscal Situation ......................................................................................................... ........................................................................ 53
3.6.1. Fiscal Policy and Central Govern ment Debt .............................................................................. ......................................... 53
3.6.2. General Governme nt Budget Revenues ..................................................................................... .......................................... 55
3.6.3. General Government  Budget Expenditure .................................................................................. ......................................... 57
3.7. Living Standard s and Employment .......................................................................................... ......................................................... 59
3.7.1. Human Deve lopment Level ................................................................................................ ................................................. 59
3.7.2. Revenues and Pr ivate Cons umptio n ....................................................................................... ............................................. 62
3.7.3. Employment and Unemployment ............................................................................................ ............................................ 64
4. Sectors of Na tional Ec onomy ................................................................................................ ................................................................... 68
4.1. Manufa cturing ............................................................................................................ ...................................................................... 68
4.2. Transport and Communications ............................................................................................. ........................................................... 70
4.2.1. Road Transport ......................................................................................................... ........................................................... 71
4.2.2. Ports .................................................................................................................. .................................................................. 71
4.2.3. Ra ilway ................................................................................................................ ............................................................... 72
4.2.4. Aviation an d “Riga” Airport ............................................................................................ ................................................... 73
4.2.5. Communications ......................................................................................................... ........................................................ 74
4.3. Constr uction ............................................................................................................. ........................................................................ 75
4.4. Energy Sector ............................................................................................................ .................................................................... 77
4.4.1. Developm ent Issues ..................................................................................................... ....................................................... 77
4.4.2. Ener gy Supply .......................................................................................................... ........................................................ 79
4.4.3. Energy Regu lation Council .............................................................................................. ................................................... 82
4.4.4. Prices and Tariffs ..................................................................................................... ........................................................ 83
4.5. Agriculture .............................................................................................................. ...................................................................... 85
4.6. Domestic Trade and Market Services ....................................................................................... ..................................................... 87
4.7. Tourism .................................................................................................................. ....................................................................... 90
4.8. Information Technologies ................................................................................................. ............................................................. 93WT/L/421/Rev.1
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5. Priorities and Reforms of Economic Policy .................................................................................. .......................................................... 97
5.1. Integration into the European Union ...................................................................................... ........................................................ 97
5.2. Economic Development Programs ............................................................................................ .................................................... 99
5.2.1. Long Term Ec onomic Strategy ............................................................................................ ............................................ 99
5.2.2. National Programs ...................................................................................................... ...................................................... 101
5.3. Privatisation ............................................................................................................ ....................................................................... 105
5.3.1. Changes in Property Structure .......................................................................................... ................................................ 105
5.3.2. Privatisation of Property Units Ow ned by the State and Local Governments ............................................... .................... 106
5.3.3. Public Share Offering an d Capitalisation of Tax Debt ................................................................... .................................. 107
5.3.4. Privatisation of Apartment Houses....................................................................................... ............................................. 109
5.3.5. Privatisati on Certificates ............................................................................................. ..................................................... 110
5.3.6. The State Property  Privatisation Fund .................................................................................. ............................................ 111
5.4. Industrial Deve lopment Policy ............................................................................................ .......................................................... 112
5.5. Business and New Techno logy Developm ent Policy ........................................................................... .......................................... 116
5.6. Small and Medium-Sized Enterprises ....................................................................................... ..................................................... 118
5.7. Competition Promotion and Regulation of Monopoli es ....................................................................... ......................................... 120
5.7.1. Competit ion Policy ..................................................................................................... ..................................................... 120
5.7.2. Regulation of  Public Services .......................................................................................... ................................................ 123
5.8. Quality Assurance ........................................................................................................ ................................................................. 125
5.8.1. National Program of Quality Assurance .................................................................................. ......................................... 125
5.8.2. National Standard isation and Metrology ................................................................................. ......................................... 126
5.8.3. National Accreditation System .......................................................................................... ............................................... 128
5.8.4. Protection of Consumer Interests ....................................................................................... .............................................. 129
5.9. Assisted areas ........................................................................................................... ..................................................................... 131
5.10. Special Economic Zones and Free Ports ................................................................................... ................................................... 134
5.11. Experts’ Council of the Ministry of Economy.............................................................................. ................................................ 138
5.12. Statistics of Informal Economy .......................................................................................... ......................................................... 139
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