Latvia should not begin implementing austerity measures in response to the impact of the war involving Iran, as this would be a misguided step, Saeima MP Andris Šuvajevs (Progressives) said in an interview on Latvian Television’s programme Morning Panorama.
He stressed that although there will be many calls for cost-cutting, the biggest mistake at this moment would be to abandon investments. According to the politician, the opposite is needed — investments must be increased so that Latvia’s economy becomes less dependent on fossil energy.
Šuvajevs noted that the conflict involving Iran is one whose economic impact is still to be fully felt. In his view, reducing the excise tax on diesel fuel is the right decision, but it is only the first step, and much more remains to be done.
The MP also expressed concern about costs in the coming winters. He recalled that four years ago natural gas was purchased at very high prices, and therefore Latvia should coordinate with Lithuania and Estonia to procure gas jointly in the future.
According to Šuvajevs,
particular attention must be paid to the root causes of the economic crisis, including dependence on fossil resources.
He emphasized the need for investments in building insulation, transport electrification, and the decarbonisation of the industrial sector.
The politician also acknowledged that Latvia was not sufficiently prepared for the crisis four years ago and can no longer afford to be unprepared. He warned that even if the conflict involving Iran were to end today, inflation would persist and Latvia’s economic growth would slow.
As reported, the government is set to review today a fiscally neutral draft law prepared by the Ministry of Finance to reduce the excise duty on diesel fuel by approximately 15%, in order to mitigate the impact of rapidly rising fuel prices on the economy and residents, the ministry told LETA.
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