At the meeting of April 14, the government ratified the national position of the Republic of Latvia prepared by the Ministry of Finance (MoF) regarding the proposal of the European Commission (EC) to amend the regulation of the European Union (EU) Funds to mitigate the consequences caused by COVID-19.
On 1 April 2020, the EC COVID-19 Response Investment Initiative took effect, introducing the amendments to several documents governing the EU Funds. These amendments do not provide for granting additional EU financing to the Member States, but rather the redistribution of the resources of the existing EU Funds allocation, providing the Member States with the possibilities to redirect financial resources from the total volume of the EU Funds. The amendments also provide for performing reallocations with the scope of a single fund among such priorities as health care, inter alia, ensuring the equipment necessary for protection of medical personnel, support to small and medium-sized merchants, establishment of new financial instruments, as well as fostering the employment. Nevertheless, at the same time, the initial amendments do not allow for performing the redistribution of the EU Funds effectively enough, as the EXC had stipulated several restrictions.
Considering the above mentioned, the EU Member States, incl., Latvia, invited the EC to introduce additional amendments to the EU Funds’ regulation, so that the EU Funds’ financing could be successfully directed towards mitigating adverse social and economic consequences of COVID-19 - first of all, to amend the rules on thematic concentration of the EU Funds, which would otherwise limit the amount of funds to be redistributed that can be directed towards mitigating the consequences of COVID-19 crisis. Secondly, to provide for the possibility to redirect the resources among the funds, as the majority of free resources of Latvia are included in the Cohesion Fund (amount 400 million EUR), which could be possible to direct to the ERDF, so that they can be used for solving the consequences of crisis caused by COVID-19. Thirdly, the possibility must be provided to support undertakings in difficulty, so that from the ERDF it would be possible to help those undertakings, which are facing difficulties due to COVID-19 crisis, for example, by financing the State aid schemes introduced by the EC Temporary Framework.
The adopted national position with respect to the amendments to the regulation provides for supporting additional amendments, namely, more flexible possibilities to dispose of the EU Funds’ resources, by directing the free resources available to Latvia in the amount of approximately 615 million euro towards mitigation of the adverse social and economic consequences of COVID-19.
The MoF, in collaboration with other authorities, partners and the EU institutions, continues performing active work, in order to prepare and provide the necessary explanations regarding the eligibility of the EU Funds’ expenditure, conditions thereof, as well as the possibilities to faster overcome the consequences of COVID-19 crisis with the support from the EU Funds. It is resolved that the direct COVID-19 crisis suppression measures will be mainly financed from the State budget. The EU Funds’ financing, in its turn, will be mobilised for the state of economic recuperation following the end of the state of emergency.
