Croatian PM says Latvia good example of how severe cuts work

Latvia responded to the tough crisis and deep recession with severe cuts and is an example of how severe measures can lead to economic growth, Croatian Prime Minister Zoran Milanovic said in Riga.

Latvia is a good example that the measures that are taken must be bold, that they must be carried out without delay, and it did this well because it had the courage, he said at a joint news conference with Latvian PM Valdis Dombrovskis.

Latvia was in a recession in 2009, after which the government imposed severe austerity measures which included budget and salary cuts and many layoffs in the state sector. Now it has the highest growth in the European Union -- 5.6% in 2012 -- and meets the eurozone criteria in terms of budgetary deficit, inflation and public debt. On January 1, ten years after joining the EU, it will introduce the euro, becoming the 18th member of the euro area.

That makes Latvia "cursed and blessed" at the same time, said Milanovic. Cursed because of the depth of the recession and crisis in 2009, and blessed because that forced it to make severe cuts which brought results, he explained.

Speaking at the "Riga Conference 2013" afterwards, he said Croatia's case was the opposite. It is blessed because it did not have such a deep crisis, and cursed because that did not force it to impose cuts as Latvia, he added.

This was Milanovic's first official visit abroad since Croatia joined the EU on July 1.

He said he was interested in hearing from his host about Latvia's experience on the road to the eurozone. Dombrovskis said he gave his full support for Croatia's continued integration into European structures.

We fully support Croatia's entry to the Schengen Area and eurozone, he said. Milanovic responded that Croatia hoped to enter the Schengen area in about two years.

We talked about bilateral cooperation. Political dialogue has been very successful so far and I hope it will be so within the EU too. As for economic cooperation, there is potential to further strengthen economic relations and ties, to which we hope the recently introduced direct flights between Rijeka-Riga will contribute, said Dombrovskis.

Milanovic also met with Latvian President Andris Berzins.

The eighth "Riga Conference 2013", taking place today and on Saturday, is focusing on defence, the economic and security challenges facing the EU and NATO, Eastern Partnership, and relations with Russia.

Milanovic is also scheduled to meet with Parliament Speaker Solvita Aboltina.

(Hina)



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