Mr. Vjaceslavs Dombrovskis:

I will start with an observation about how alike our countries are. Both are small countries and both have spent some time in recent history struggling to regain their national identity after being part of an empire. It is only 20 years since Latvia left the Soviet empire. The third similarity is the commitment and drive for economic development. Since Latvia joined the European Union, Ireland has been a special country for us. We have been inspired by Ireland's example of rapid economic development and have always sought to emulate it. In our period of high economic growth, we liked to call ourselves the Baltic tiger, after the Celtic tiger. Many similar things have happened to the two countries since that time and there are many ways in which we are alike, although not all are as we thought they would be. Latvia has had a painful emigration record over the past ten years; 10% of the population left to look for jobs and better lives in other countries, with the United Kingdom and Ireland representing two major destinations. There was a major economic crisis similar to Ireland's, with financial globalisation, excessive capital flows, reckless borrowing, a real estate boom and resulting shadow cities, a large percentage of bad loans and the recapitalisation of major banks by Latvian taxpayers. There is also the painful experience of adjustment under a fixed exchange rate, just like Ireland. We have gone through some painful fiscal consolidation. Public sector pay has been cut by 35%, on average, over two years. Now, perhaps, an example we can set to Ireland and other countries in a similar predicament is that there is light at the end of the tunnel. After finishing with fiscal stabilisation, Latvia had some robust growth, in the order of 4% to 5% of GDP, for two consecutive years.