Foto: Rūta Kalmuka, F64
Latvia's Economics Minister, Daniels Pavļuts, had an article in the Wall Street Journal on 22 November; an article which deserves merit for various reasons.
It is much better than the often stereotypical ‘austerity vs. stimulus' debate and I think his term ‘smart austerity' is here to stay!
A couple of good points from the article: 1) That the strategy had a focus on future growth (structural reforms, leaner government) and was not just aiming at austerity for austerity's sake. 2) That removing macroeconomic imbalances was necessary to restore confidence, which was so obviously at an all-time low in June 2009 (the time of the really big devaluation scare). USA (and the UK and some other countries) may not have lost investor confidence but Latvia certainly did, just witness the drop in its credit rating at the time. Restoring this has been essential.
