Riga, 12 July 2007


Taking into account that the anti-inflation plan of the government is just taking effect (a thorough evaluation of the effectiveness of the stabilizers it envisages will take time) and the appearance of the first signs of the stabilization of the real estate market and slowdown of the pace of lending, the Bank of Latvia Council resolved today to leave the interest rates of the central bank (i.e. refinancing, overnight lending facility and overnight deposit facility) unchanged. The minimum reserve requirement and calculation procedure are also to remain unchanged.

The Council observed that in the first quarter of the year, the recent development tendencies – fast growth combined with a high level of inflation and current account deficit – remained in place. In the middle of the year, however, several signs in certain branches of the economy – the real estate market, financial sector, commerce – point to the likelihood that in the next periods the economic growth in Latvia could gradually slow down. As a result of the government anti-inflation plan, in certain segments of the real estate market, price adjustments have been observed in recent months and the growth in mortgage lending that in April was still at the previous high, in May dropped to 56.6%, the lowest since August 2005 and in June the downward trend has continued (to 56.2% in accordance with preliminary data).

As a result, the rate of economic growth could begin to approach levels that would diminish the country’s lack of external balance, expressed in the current account deficit, and its internal imbalance, i.e. the high level of inflation.

The interest rates set by the Bank of Latvia remain as follows:

- refinancing – 6.0% per annum;

- overnight deposit facility – 2.0% per annum;

- overnight lending facility – 7.5% per annum.


The refinancing rate was last raised on 18 May 2007 by 0.5 percentage points to 6.0%.

The minimum reserve requirement for banks and branches of foreign banks has been 8% since 24 December 2005.

In compliance with the requirements of the European Central Bank with regard to aggregating the information necessary for the Centralized securities data base at the level of individual securities, preparing the payment balance and international investment balance for the purpose of reflecting information on portfolio investments and synchronizing the processing of statistics in all EU member states, the Bank of Latvia Council approved “The Regulation for the Monthly Report on Owners of Securities” (to take effect 1 January 2008)

The information, in the form of a monthly report, will be submitted to the bank of Latvia by credit institutions (except electronic money institutions) and investment brokerages that have been registered with the commercial register of the Register of Enterprises of the Republic of Latvia, have received a licence from the Financial and Capital Market Commission for providing investment services and have been authorised to hold financial instruments.

The information included in the reports will cover securities emitted in Latvia and abroad that have been acquired through the above credit institutions and brokerages and data on the country and sector provenance of the owners.