Kariņš: Government "Belt-Tightening" During Growth Could Cause Problems
Former Latvian prime minister and New Unity party leader Krišjānis Kariņš says that overly strict spending cuts could stifle the country's economic growth. He noted that foreign direct investment in Latvia has reached one billion euros for the first time.
If a government tightens its belt too much while the economy is growing, it can create problems. That is what Krišjānis Kariņš, a former prime minister of Latvia and leader of the party New Unity (JV), said on the TV3 podcast "Piķis un ģēvelis!". His remarks touch on budget and economic policy, a topic still under discussion in Latvia.
Kariņš said that, for the first time, foreign direct investment in Latvia not linked to European Union (EU) funds has reached one billion euros. Gross domestic product (GDP) growth in the country this year could be around 2.5%.
In the politician's view, this is genuine growth, and if the government begins to restrict spending too sharply, that development could be suppressed. According to Kariņš, this would mean less money and fewer taxpayers.
Defence spending
The former prime minister also discussed defence funding. He stressed that Latvia must work with its European partners so that the EU exemption granted to Latvia for defence spending, which allows it up to 1.5% of GDP, remains in force in 2030 as well.
Kariņš is currently a senior adviser on geopolitical issues at Kreab, an international strategic communications agency.
