Financial accessibility for the development of the national economy in Latvia is mainly ensured by lending, stated Karlis Vilerts, head of the Research Department of the Bank of Latvia, in the podcast "Piķis un ģēvelis!" on tv3.lv.
Vilerts reminded that before the global financial crisis, the volume of lending in Latvia was very high. However, after the crisis, the situation changed dramatically. "The financial situation of enterprises and households was terrible. Every fourth loan payment was delayed," added Vilerts.
Many could not repay their loans at that time, banks became very cautious, and the volume of lending sharply decreased. This slowed down the development of the economy for a long time.
Although in recent years the financial situation of enterprises and households has significantly improved, lending conditions remained strict for a long time. Latvia still has relatively high interest rates, and banks often require very large collateral, the expert noted. He emphasized that this is not quite proportional to the low level of insolvency and the small amount of debt among households.
"Just recently, [we were] in such an absurd situation that we have excellent indicators for loan quality, the financial situation of enterprises improves year by year. The level of household debt is the lowest in the eurozone. Everything is fine, but we still have the highest interest rates, and enterprises are required to provide collateral twice the amount of the loan. I don’t want to use the word 'pawnshop,' but essentially you are given less than you take. This situation is somewhat wrong, and only in the last two years have we seen it starting to improve," says Vilerts.
The Bank of Latvia emphasizes that there has indeed been a turning point in the lending sector in Latvia, and this industry has begun to grow rapidly.
