When Will Latvia's Critical Debt Threshold Be Reached? 0 10

"The first thing I want to remind you of is the famous phrase of former Prime Minister Krišjānis Kariņš: 'There is more money than ever before!' This was said at a time when borrowing was possible at a 0% interest rate. Of course, this was a message that borrowing could be done without worry and there would be no consequences for us.

Experience shows that such a loan is cheese in a mousetrap and it won't be completely free. At the moment when interest rates change, it turns out that all external debts, which were supposed to have a repayment period, cannot be repaid, and the amounts for servicing the debt have started to grow unpleasantly. Moreover, it is clear that 0% interest rates on international loans are not expected in the near future. Translating K. Kariņš's thesis into today's interpretation, it turns out: 'There is less money than ever imagined!'

"This is because the budget deficit is still in vogue, old debts need to be refinanced for a larger amount, and there is an irresistible desire to borrow additionally. We have problems with this debt that should have been repaid yesterday, and these problems are even greater than the desire to borrow tomorrow."

The author further reports that the chairman of the Fiscal Discipline Council, Jānis Priedītis, believes: "Loans are essentially a tool without which the state cannot do without."

However, if the debt per capita exceeds 5,000 euros, or more than half of the annual minimum wage, "many people would ask directly and without beating around the bush — is it good to borrow more?"