Is the Latvia intervention team assembling?

So we’re in the new era of the Swedish presidency of the European council.  Insh’allah this will be the last country presidency under the rotating system once all that Lisbon messiness is sorted out.  The Swedes have the advantage of taking over from the politically hobbled Czech presidency and they begin with a slick website and very much with the times there’s a Twitter feed.  So what do we learn is getting the Swedish presidency twitterers excited? —

02/07 14:39 MÃ¥rten Wierup: 1st meeting went well-the most exciting thing that happened was that Latvia’s excessive budget deficit was added to the Ecofin agenda (7/7)

One’s first reaction might be to be glad that there’s someone in the world who finds Ecofin agenda items exciting.  One’s second reaction might be to wonder: what’s the need for yet another rap on the knuckles for Latvia?  Our twitterer is indeed correct that Latvia did not appear on the original draft agenda, so what’s the urgency?  Well, Edward had the relevant background a few days ago.  The IMF and the European Commission appear to be not on the same wavelength regarding the Latvian rescue program, not least on the role of the exchange rate peg therein.  If there is a split (especially within the European institutions), it might well be the kind of thing that would get sent to the ministers to sort out.   One thing this suggests: since Ecofin doesn’t meet till next Tuesday, don’t hold your breath waiting for the next installment of the IMF loan to Latvia.

6 thoughts on “Is the Latvia intervention team assembling?

  1. Don’t hold your breath waiting for the next installment from EC as well – today it was announced to be postponed at least to the 2nd half of July.

    However, the really interesting question now is Estonia – the situation deteriorates there rapidly. Having Germany-like addiction to exports combined with worsening public image and improved with more rational attitude towards devaluation, having the positive example of Swedish devaluation in front of them, and the worsening prospects of EUR introduction, will pose an extreme challenge to EC to defend the new economic orthodoxy.

  2. I am curious to see whether the Swedes continue to act in their own narrow interest – That is they feel that maintaining the Baltics currency pegs is better for their banks even if it means a more U or L shaped recovery for the Baltics (I have argued that this assumption is incorrect with bank staff to no avail, but that they believe it to be true remains the situation on the ground). Or will they continue to act as they have so far – pursuing a policy domestically which is exactly the opposite of the policy that they recommend to their neighbors in the Baltic States?

  3. Dear bloggers, why one should misinterpret some obvious things? Latvia is under the EU’s Excessive Deficit Procedure (EDP) and the July ECOFIN will discuss how and until when Latvia ahs to correct its deficit to below 3% of GDP. Hope that helps not to over exaggerate the facts.

  4. Pingback: Wanted: a better EU policy on Latvia « Mats Engström

  5. Pingback: The EU Commission Rift On Latvia Seems To Be Deepening | afoe | A Fistful of Euros | European Opinion

Comments are closed.