Public Finance Perspective - Latvia

Latvia quickly began to develop a successful economy and joined the League of Nations in 1922.In 1940, Stalin presented Latvia with an ultimatum, admit Soviet troops or face annihilation.During the next fifty years, the Soviet Union ruled over Latvia.Under former Soviet rule, public administration and management were highly centralized.The unemployment benefits are financed through 1.5% of the social security rate (World Bank, 1995) .Latvia has also recently tapped into the international bond markets.Treasury bill auctions were also introduced to finance the budget.Latvia's move toward a convertible currency came in two stages.The two traded equally until Latvia became flooded with Soviet rubles.Latvia replaced the ruble with the rublis as the legal tender.