OREANDA-NEWS. September 13, 2010. Prime Minister Valdis Dombrovskis met Chancellor of the Federal Republic of Germany, Angela Merkel within the framework of her official visit to Latvia to discuss the cooperation between both countries in the area economy, in particular, the financial and economic situation, as well as current European Union issues.

At the beginning of the meeting, German Chancellor Angela Merkel expressed her acknowledgement to Prime Minister Valdis Dombrovskis and his Government for the measures it has implemented to lead the country out of the crisis. The German Chancellor mentioned that other European countries should follow the Latvian example in overcoming the economic crisis and implementation of fiscal consolidation. The Prime Minister mentioned that Latvia is implementing substantial structural reforms to develop a competitive and sustainable economy based on export and production. The Prime Minister informed that the increase in GDP in first two quarters of 2010 and increase in industrial production and export by 12.1% and 30.3%, respectively, are indicative of gradual stabilization of the economy in Latvia.

V.Dombrovskis also pointed out that the Government has started drafting of the next year’s budget and making of proposals for fiscal consolidation with the objective to arrive at the budget deficit in the amount of 6% of GDP in 2011. The Prime Minister emphasized that Latvia has set a courageous goal to reduce the budget deficit to the amount of 3% of GDP by 2012 and to introduce the euro in 2014.

The officials discussed the bilateral economic cooperation between Latvia and Germany. The Prime Minister mentioned that Germany is an important partner of Latvia for economic cooperation and that Latvia is interested in the long-term economic partnership and investment attraction in such sectors as energy, transit and logistics, as well as production. The Prime Minister highly appreciated the current investments of Germany in the production and development of the national economy on the whole and appealed to the Federal Minister of Economics of Germany and a business delegation to visit Latvia in order to discuss the attraction of the German investments to Latvia. Minister for Economics, Artis Kampars informed about the investment projects in the area of energy, science and metal working, and that the German entrepreneurs are asked to implement them. The minister noted that Latvia hopes for successful cooperation with Germany within the framework of the science infrastructure project” Development of the Cyclotron Centre and Ampere Institute”. A.Kampars also informed about the project ”Messe Riga” within the framework of which a construction of a new exhibition complex is planned in close cooperation with one of the leading organizers of the exhibitions and events ”Messe Frankfurt”. The minister also called for cooperation in the project ”Liepaja Electric Power Station” and ”Production of Aluminium Products from the Recycled Aluminium”.

Both sides also discussed the energy issues. The Prime Minister acknowledged that Germany’s future presence in the process of development of the energy market of the Baltic region, as well as in integration in the European administration networks is of great importance and informed about the project ”Liepaja Electric Power Station” whose objective is to provide a new electricity generation capacity in Latvia. The Prime Minister pointed out that the announced tender is open and called for participation of the German businesses in the project. During the discussions, V.Dombrovskis stressed that Latvia’s objective is diversification of energy supplies and therefore it has started the implementation of the project on the development of a coal –biomass station. German Chancellor, A.Merkel said that a close cooperation of the Baltic countries is needed for the energy project development and that it is important for Latvia to prepare for the European Council in February, 2011, where the issue on energy will be on the agenda.

The officials also discussed the current EU events – coordination of economic policy, review of the EU budget and cohesion policy. The Prime Minister emphasized that Latvia supports more strict coordination of the Member States’ economic policies at the EU level in order to promote the functioning of the Stability and Growth Pact. German Chancellor, A.Merkel acknowledged the need to introduce more strict sanctions against the countries which do not comply with the requirements of the Stability and Growth Pact and repeatedly fail to comply with the recommendations of the EU for reduction of the budget deficit and government debt. The two officials also discussed the amendments to the EU treaty.

V.Dombrovskis stressed that in setting the priorities for next multi-year budget it is necessary to retain the initial objective of the cohesion policy – to reduce the economic and social disparities among the EU Member States. The Prime Minister acknowledged that in context of a common agricultural policy Latvia pays a particular attention to equal and fair direct payments for all EU farmers. The German Chancellor mentioned that this issue should be addressed within the framework of drafting of the EU budget for 2014-2020 if it applies also to other new EU Member States, for example Poland.