This week, the Ministry of Finance (MoF) submitted the draft Recovery and Resilience Facility (RRF) plan for Latvia for the initial review to the European Commission (EC), as well as commenced public discussion of the plan. Following the receipt of the opinion from the EC and the results of the public discussion, the draft plan will be enhanced in cooperation with the social and cooperation partners.
The Minister for Finance Jānis Reirs emphasises: "The RRF plan funding will serve as a significant support to development of entrepreneurship both by direct support to raising productivity and skills and via fulfilment of public procurement orders. Based on the MoF calculations, the direct aid to merchants will comprise 28% of the RRF resources, while approximately 66% of the resources will come at disposal of merchants via public procurement procedures (construction, services, etc.). Therewith, the direct aid to economic activity will comprise more than 90% of the funding of the RRF plan for Latvia."
The work on the RRF plan and the discussion thereof is in progress and, given that also the European Commission continues developing practical implementation mechanisms, the RRF supplements and amendments would be submitted to the EC, once the exact amount of the funding available to Latvia is clarified. Up to 30 June 2022, the EC will adjust the calculations regarding allocations to the Member States.
In light of the changes in the RRF regulation with respect to the planned division of the funding, with the agreement thereon being reached on the EU level in autumn of 2020, the MoF work group had to considerably review the initial proposals of the ministries, as a result whereof the total time schedule for the development of the draft RRF plan was affected.
Concurrently with discussions on the national level, the MoF organised informal consultations with the EC regarding the desirable content and structure of the RRF plan, ensuring the involvement of the responsible line ministries and institutions in the negotiations and correspondingly integrating the recommendations in the draft RRF plan.
The MoF representatives also took part in the meetings of the committees of the Saeima (Parliament), the NGO’s Memorandum Council, as well as the National Tripartite Cooperation Council, providing information updates as to the progress with respect to the development of the RRF plan.
The work on the development of the RRF plan on the governmental level has been organised in six work groups, assigned with the task of developing the vision on the reforms contained in the plana and the related investments. Each of the work groups was set up based on the initially identified components of the RRF plan - climate change and sustainability, digital transformation, transformation of economy and productivity reform, health, reducing inequality, the rule of law.
To ensure public involvement, the MoF organised a remote informative meeting with the social partners in November last year. It was followed by remote discussions with the partners regarding each of the six RRF components, held from 10 December to 14 December 2020, where the line ministries and responsible institutions presented their proposals for the draft RRF plan.
Approximately 130 representatives from non-governmental sector, line ministries and institutions, as well as from the EC, took part at each of the six thematic discussions. The representatives of public organisations asked their questions and provided recommendations in writing (in discussion's section) and orally, with written answers thereto having been prepared and sent in the form of references.
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.
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 EC 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 guaranteed available funding for Latvia comprises EUR 1.65 billion; therewith, for the time being, the RRF plan has been prepared within the scope of this amount.
The draft RRF plan is available for review for each and every interested person (in Latvian) 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.
