OREANDA-NEWS. October 14, 2009. Prime Minister Valdis Dombrovkis continued his working visit to Finland. Within the framework of the visit he had a meeting with the Prime Minister of Finland, Matti Vanhanen, reported the Official website mk.gov.lv.

The main issue discussed by both Heads of Government during the meeting was the economic situation in the region, including economic situation in Latvia and its way out of crisis. The Prime Minister of Finland, M.Vanhanen expressed his understanding of the situation and problems of Latvia because he remembers very well the crisis in Finland of early 90-ies. M.Vanhanen: ”We will try to help your country to stabilize the economic situation and I believe that your Government will be able to do it and will reach an agreement with international lenders”.

Prime Minister Valdis Dombrovskis expressed his gratitude to the Head of the Government of Finland for opportunity to pay a working visit to Finland and for Finland’s partnership in the international financing program of Nordic countries (Denmark, Finland, Norway and Sweden). Within the framework of the program it is planned to grant EUR 1.8 bill or LVL 1.26 bill to Latvia.

V.Dombrovskis emphasized that currently the Government is actively working on fiscal consolidation and is looking for additional measures for it. ”I am convinced that this Government will find a possibility to consolidate the budget and continue the program with international lenders”, noted Valdis Dombrovskis. He also informed about the visit of the EU Commissioner J.Almunia that is scheduled for the beginning of next week. This visit will be of great importance for Latvia. The Head of the Government expects that this visit will provide further positive developments in the area of economy and fiscal policy consolidation of Latvia.

During the meeting the Prime Minister of Finland characterized the current economic situation in the country. According to analytical and statistical data, the GDP of Finland will return to level of the year 2006. In total, in 2009 the GDP of Finland will decrease by 7.2%. The experts believe that next year it will increase by 1.6%. Decrease in volume of Finnish exports has left a negative impact not only on the Finnish budget surplus, but has also contributed to rising of unemployment. According to statistical data the unemployment level will reach 10% this year.

During the discussion the Prime Minister of Finland, M.Vanhanen asked about the initiative of the Head of the Government of Latvia on the protection of borrowers. Prime Minister Valdis Dombrovskis answered that this initiative is only in the preparation stage, the legal analysis of the issue is performed and its main objective is protection of borrowers. The Prime Minister informed that on October 22 a meeting with bank representatives is planned aimed at discussing the protection of borrowers.

V.Dombrovskis emphasized that this is a matter to be solved bilaterally because both, the borrowers and lenders have to take responsibility for the situation in the real estate market of Latvia, because the real estate market bubble was artificially created and stimulated.

Both government leaders discussed the progress in ratification of the Lisbon Treaty and expressed hope that it will not prolong and end successfully.

During the meeting the Heads of Government discussed the content of the forthcoming Copenhagen Summit – the United Nations Climate Change Conference that is scheduled for December, 2009. Within the framework of the conference it is planned to reach an agreement on the world climate policy after the year 2012 when the period for commitments established in the Kyoto Protocol terminates. Prime Minister V.Dombrovskis expressed the opinion that Latvia supports defining of the emission reduction commitments within the framework of international agreement, because it would help to retain competitiveness of the EU enterprises and would prevent the risk of transferring them to other regions.

The goal of the EU in the Copenhagen Conference is to reach an agreement on ambitious enough world climate policy. Within the framework of this conference an agreement should be reached on the measures for emission reduction in developed and developing countries.

As to the financial support of the EU for implementation of the climate policy of developing countries, the Prime Minister indicated that in view of the financial crisis Latvia’s capacity in providing the financial support will be rather limited till 2012. Both sides agreed that it is very important to clarify at the conference the financing mechanism how to provide the support to the developing countries for emission reduction because the financial support is estimated in the amount of EUR 100 bill.

During the discussion the Heads of Government touched upon the issue of the EU strategy for the Baltic Sea Region. Both Heads of Government agreed that environmental cleanliness of the Baltic Sea is one of the priority strategy goals and it should be implemented in context with agricultural policy, transport policy and other goals.

The main goals of the EU strategy for the Baltic Sea region is to co-ordinate the incentives of the EU Member States, including regional institutions, financial institutions of the Baltics, non-governmental organizations and other involved parties to balance the development of the Baltic Sea region.

The strategy outlines four main tasks. Their implementation requires urgent aid at regional level. First – to promote the sustainable environment that was particularly supported by the Prime Minister of Finland, because the cleanness of the Baltic Sea is responsibility of the whole region. Second – to increase the welfare of the region. Third – to increase availability and attractiveness of the region. Fourth – to ensure security and protection of the region.

The two leaders discussed the developments in the region's energy sector. This issue was discussed in the broadest context with regard to both, construction of new nuclear plants and interconnection between the Baltic countries and Sweden, as well as opening of the energy market, free competition in the energy market and region’s energy independence.

With regard to relationships with other countries the sides touched upon the issue of Russia. V.Dombrovskis characterized the current relations of Latvia and Russia as very pragmatic. The Prime Minister informed that currently the intergovernmental agreements are being prepared on double non-taxation and investment protection. V.Dombrovskis expressed hope that these agreements will be signed already this year.