Darba pienākumu dēļ man šodien jābūt Briselē, bet esmu pagodināts jūs uzrunāt virtuāli.
Latvijas Banka un tās komanda vienmēr man ir īpaši tuva – kā mana bijusī darba vieta un kā institūcija, kas stiprina Latvijas un Eiropas valūtu, ekonomiku un konkurētspēju.
Honourable Governor Kazāks, Vice-President de Guindos, ladies and gentlemen: it is a pleasure to open the 2024 Economic Conference organised by Latvijas Banka and the European Money and Finance Forum, SUERF.
Today's world is very different to just a few years ago. While we managed to withstand the COVID-19 pandemic, we now have to deal with Russia's relentless war against Ukraine - on our doorstep, and in its third year.
This aggression challenges the democratic world and its ability to prevail over Russia's sense of imperialistic impunity. These major shocks have particularly affected the EU economy.
And they still do.
Along with our need to continue supporting Ukraine, we must also tackle longstanding challenges related to our productivity growth and competitiveness.
They will be key objectives of the incoming European Commission, to boost the EU's sustainable prosperity and competitiveness. They are also relevant for Latvia, of course. I am sure Luis de Guindos will say more about this very soon in his keynote address when he discusses economic challenges.
One thing is certain, however. Achieving our objectives – in energy security, the digital and green transitions, defence, among others - will require a great deal of financing, combining public and private investment.
On the public side: financing reforms and investments, for example through the Recovery and Resilience Facility, is paramount. Both now, and in the years ahead.
High inflation and supply chain disruptions have strained the implementation of some RRF projects.
In Latvia's case, given the tight deadlines, implementation of certain milestones and targets in the Recovery and Resilience Plan should be accelerated.
This will bring about structural changes to Latvia's economy, improving its competitiveness, resilience, productivity and innovation capacity.
It is also essential for Latvia to speed up implementation of the 2021-2027 cohesion programme.
Public funding should also leverage investments from the private sector, on which we rely for much of the financing needed. The EU will need to generate a great deal of risk capital to stimulate innovation to boost its competitiveness and growth.
This is why we need deeper and more integrated capital markets. This will also broaden options for our companies to access diverse financing resources.
As you know, in Europe, companies usually obtain most of their financing from banks. But in many cases, bank financing is not enough – or difficult to obtain. This applies especially to young innovative companies that need other sources of financing to allow them to scale up.
It is a particular issue in smaller economies such as Latvia, where finance availability is limited. The result is that companies often scale back investments and growth ambitions.
In turn, this holds back Latvia's economic development.
There are several reasons for the sluggish lending activity.
Loan interest rates in Latvia and the other Baltic States are generally among the highest in the euro area.
These countries also have some of the strictest collateral requirements, and the situation is made worse by limited competition in Latvia's credit market.
Bank credit in Latvia remains relatively low. In the first quarter of 2024, as the Bank itself has said, the balance of issued loans for non-financial corporations and households was only 27.5% of GDP.
In the euro area, the figure is 78.9%.
Bringing more competition into Latvia's banking sector is essential to increase companies' access to finance. Boosting the single market for financial services would also make it easier for local companies and SMEs to tap into capital markets and access various types of funding, both at home and abroad.
This is, of course, one of the core objectives of the Capital Markets Union. Its completion will be a priority for the next European Commission.
Regional initiatives can help too. Here, a pioneering example is the pan-Baltic capital market to boost the region's economies. Setting up common market infrastructure in the Baltic countries is a trailblazer for wider capital markets integration in the EU, along with their efforts to align rules in securities' offerings.
I trust that your conference today will debate these and other leading issues. Hopefully, it will come with some more ideas on how to enhance the funding opportunities for Latvia's - as well as for Europe's - businesses and people.
I will conclude here and wish you a successful and stimulating conference. Thank you.
Paldies un veiksmīgu konferences darbu šodien!
