If the EU and International Monetary Fund (IMF) want an example to show that post-crisis fiscal austerity can work, Latvia is likely to be high on their list. After the Baltic country recorded budget deficits in excess of 7% of gross domestic product (GDP) for three consecutive years from 2008 to 2010, finance minister Andris Vilks managed to run a balanced budget in 2012, having taken office in November 2010.
“The measures we have taken are paying off now. We are not just talking about austerity. The country had understood that adjustment was inevitable, that we needed to change the model for the national budget and national business. We have achieved more than our goals and faster than expected,” Mr Vilks tells The Banker.
