The cumulative output decline was 24%; unemployment peaked at 20%. Compared with this economic collapse, even some of the euro area peripheral countries were faring relatively better. Keeping the euro peg was considered by many as a “mission impossible”. External devaluation was presented as the only way forward. But Latvia did not choose the easy “quick fix”. It embarked on a courageous fiscal consolidation path and structural reforms. Two years later, the speed of the economic rebound is as extraordinary as the depth of the recession. Against all the odds, Latvia recorded a real GDP growth rate of 5.5% in 2011. While domestic demand was the main driver of growth last year, exports have also recovered very strongly. Evidently, Latvia’s competitiveness has improved, even though many challenges still lie ahead. The economic dynamics behind this swift stabilisation and recovery merit close examination. Equally interesting is the political economy of the Baltic adjustment. Jean-Claude Juncker once said: “we all know what to do but we don’t know how to get re-elected afterwards”. This saying, often referred to as “Juncker’s curse”, unfortunately seems to be confirmed by the crisis in vast segments of the euro area. Italy, Greece, Ireland, Portugal: in all of these countries the government fell directly as a result of its handling of the economic crisis. Latvia seems to be the exception to the rule. Despite harsh austerity measures the Prime Minister managed to get re-elected twice. Many ruling politicians in Europe these days may look upon this with incredulous admiration.
“credere”) supports regaining the trust in the financial system and in the banks as institutions that 2/3  BIS central bankers' speeches  ensure the allocation of funds to the private and the public sector. Companies in Romania, as beneficiaries of European funds, need to respond to some pressing issues such as inadequate management and financial discipline. Only around 15% of small and medium companies are eligible for financing, with a management team capable to conduct a lucrative activity that reflects in a sound set of accounting documents, like the balance sheet and the P&L account. These companies too, can be affected by the contagion effect, for instance when their projections and cash flows are subject to repayment from other companies, with delays. To support these companies and to ease the access to finance, one needs to improve the policies and continue the financial reforms to create a more adequate and flexible frame for investments and the multiplier effect of co-financing. The European Investment Bank has been a strong pillar for this strategic economic development, channeling investments towards the crucial sectors of transport, digital infrastructure and the new technologies, education for skilled labour force, healthcare, or agriculture. The European Investment Bank contributes to creating the right mindset and responsible attitude of assuming calculated risks. It supports the communication of sound public policies and priorities for Romania’s economic and social development, to continue and expand the European integration and economic convergence.