The Ministry of Finance (MoF) hereby elaborates on information about the scope of funding of the Recovery and Resilience Facility (RRF) plan available to Latvia expressed in the interview with the member of the European Parliament (EP) Roberts Zīle on February 10, in the LTV broadcast "Rīta Panorāma": Latvia will fully expend all the guaranteed funds of the RRF available thereto - up to EUR 2 billion. In turn, the part of the loan of the RRF, the sum whereof comprises up to EUR 2.48 billion, will be used by Latvia in case, if the loan interest and other conditions thereof would be more favourable than those of other financial instruments currently available to Latvia.
The Ministry of Finance explains that Latvia will submit the supplements and amendments of the RRF investment plan to the EC sequentially. The draft RRF plan for Latvia is currently prepared and this week will be submitted to the EC for initial review thereof, with respect to the guaranteed available funding (being granted and not subject to repayment) in the amount of EUR 1.65 billion, constituting 70% of the maximum allocation. Following the receipt of the comments from the EC and negotiations with the social and cooperation partners, the final version of the RRF plan will be submitted to the EC and the EU Council by 30 April this year.
The work on the RRF plan and discussions with respect thereto is in progress, and the RRF supplements and amendments will be submitted to the EC after 30 June 2022, as soon as the full amount of funding available to Latvia will be clarified. The coalition agreed upon such gradual planning approach, believing that there are no grounds to distribute money, while it is not yet known, whether it would be available.
In turn, the part of the loan of the RRF available to Latvia in the amount of up to EUR 2.48 billion (subject to repayment), which the EU Member States would be able to borrow under favourable interest terms, will be resolved upon by the MoF at the moment, when the exact loan conditions - interest, terms, etc. would be known, and it is expected not earlier than in summer this year. The MoF is actively following up the situation and will adopt well-considered and responsible decisions. As the conditions of the part of loan of the RRF, such as interest rates, terms, etc., are not yet known, the MoF is not currently planning any particular borrowing, because, for the time being, Latvia has a very good credit rating and stable access to financial markets.
The RRF (Recovery and Resilience Facility) is a new budget programme under the centralised management of the EC, established in addition to the EU multiannual budget for the programming period of 2021 - 2027. The purpose of the facility is to support reforms, the need whereof has been specified in the European Semester Country Specific Recommendations, as well as investments, specifically those related to the transition to a green and digital economy, as well as to reduce the social and economic impact caused by the crisis. The draft RRF plan has been prepared in accordance with the objectives of the National Development Plan and the recommendations from the EC, observing the recommendations set by the European Union (EU) Council.
This week, Latvia submitted the draft RRF plan for Latvia for the initial review to the EC. The draft plan has been prepared in accordance with the objectives of the National Development Plan and the recommendations from the EC.
Implementation conditions for particular RRF investment projects will be developed after the particular planned investment measures would be approved by the Cabinet. In accordance with the conditions of the RRF Regulation, the final version of the RRF plan is to be submitted for approval to the European Commission and the EU Council by 30 April 2021, at the latest. The RRF funds might be available for Latvia in the second half of this year.
To prevent the harm caused by COVID-19 pandemic to economy and social field, stimulate the recovery of Europe, as well as to protect and create jobs, in Spring this year, the EC proposed to introduce a large-scale European recovery plan. A significant part of the European recovery funding has been allocated to the RRF. The creation of the EU support facility of such scale within such a comparatively short timeframe is unprecedented. At the end of 2020, the EU legislators reached a conceptual agreement regarding the RRF regulation, which is expected to be approved in the European Parliament at the beginning of February this year.
The work on introduction of the RRF is being organised in six directions - climate change and sustainability, digital transformation, transformation of economy and productivity reform, health, reducing inequality and the rule of law. Following the EC recommendations, 20% of the RRF funds are planned to be allocated to digitisation and 37% - for achieving climate objectives. It is planned to allocate EUR 330 million (20% of the RRF funds) for reducing inequality, EUR 181.5 million (11%) – to the health sector projects, EUR 165 million (10%) – to transformation of economy and productivity reforms, and EUR 33 million (2%) – for strengthening the rule of law.
The draft RRF plan (in Latvian) is available for review for each and every interested person on the MoF website and the EU funds website. Comments and proposals regarding the draft RRF plan and appendices thereto can be submitted in an electronic form by March 9 this year, by sending them to the e-mail address: rrf@fm.gov.lv.
