the direct and indirect effects of prices will impede returning the inflation indicator to the goal declared by the eurosystem, i. e. under 2 %, but close to that figure. the extraordinary monetary policy measures implemented by eurosystem continue to be an important factor stabilizing the euro area. the conditions for borrowing have become more favourable both for enterprises and households. the dynamic of loans granted in the euro area continues to improve, yet the speed of recovery is low. therefore, at the 3 december meeting of the ecb council we decided on several measures : • to further reduce the overnight deposit facility interest rate to minus 0. 30 % ; • to extend the expanded asset purchase programme to the end of march 2017 ; • to reinvest the principal amounts of the securities purchased within the expanded asset purchase programme once their term of maturity has set in ; • to include amongst the purchasable assets also secure, investment grade debt securities emitted by local governments ; bis central bankers ’ speeches • to continue to conduct refinancing operations with a set interest rate and full allotment at least to the end of the last reserve requirement period of 2017. the decision taken by the ecb council will mean even cheaper resources at the disposal of latvian commercial banks, households and enterprises. i hope that this loan money will reach households and businesses without an additional surcharge. the costs of servicing the latvian government debt will also continue to drop, which will mean additional savings – and it would be essential not to consume those but to direct them toward implementing structural reforms, thus increasing the country ’ s competitiveness. instead of additional borrowing to make use of the low interest rates, it is important to reduce the public debt, which would have a positive impact on the budget as well. but i will turn to that in a little while. ( chart ) latvijas banka has continued with the expanded asset purchase programme by purchasing securities emitted by the government of latvian and international organizations in the amount of 1. 44 billion euro over eight months of this year. the purchases of latvian government securities by latvijas banka and ecb had reached 630 million euro by the end of october. 2. and now let ’ s turn to latvian economic growth analyses by sector and other criteria indicate that the latvian economy is growing in accordance with earlier predictions and the rate of this growth could be characterized as moderate. given the complicated situation in the external environment, such a result can be considered as satisfactory

reserve will be very important. – under the current circumstances, structural reforms in education and healthcare systems gain even more importance. it is my great hope that in 2016, serious reforms will take place in both of these areas, in order to improve latvia ’ s competitiveness, and that measures will concurrently bet taken to explain to the population why such reforms are necessary and what positive effect they will have on our economy in the future. why am i discussing budget matters at this time? we are worried about the obvious fact that all possibilities for organizing the budget have been exhausted. it is said that latvia can no longer sustain tax revenues at the level of 28 % of gdp and that the budget is overall too small. thus groundwork has been laid for the raising of taxes next year. under such circumstances, the latvian business environment would be seriously endangered and, with it, any successful economic development in the future. we have at least six months till the drafting of the next budget begins and i hope that the ministry of finance and the government will launch a serious discussion for us to see what the government is spending overall and whether the only way to improve the budget situation is to continue brutally raising the taxes. bis central bankers ’ speeches