To ensure the availability of guarantees for loans issued by credit institutions to farmers and other economic operators in rural areas, the Government approved amendments on Tuesday, 18 August, to the regulations governing the Agriculture, Fisheries and Rural Development Guarantee Programme. Going forward, guarantees will also be available for loan restructuring if a farm experiences liquidity problems.
A guarantee may be provided where a credit institution restructures a borrower’s financial obligation, covering up to 50% of the principal amount of the financial obligation restructured by the credit institution. The total amount of guarantees granted to one beneficiary under this provision may not exceed EUR 750,000. This solution is particularly important for primary agricultural producers who, since 2023, have faced production risks caused by adverse climatic conditions. These risks have significantly affected farm revenues and resulted in liquidity difficulties. A guarantee for loan restructuring can help farms overcome financial difficulties and continue their economic activities.
At the same time, funding under the guarantee programme will also be available to other economic operators in rural areas, including for the implementation of support measures related to the Common Agricultural Policy (CAP). Guarantees may be used for investments in the production of primary agricultural products and the processing of agricultural products, for rural and forestry development, as well as for guarantees for economic operators, associations and foundations.
The amendments also clarify the procedure for applying the guarantee fee. An annual fee of up to 0.5% of the guarantee amount will be charged for granting or extending a guarantee. However, if the amount of State aid available to an economic operator is insufficient, AS “Development Finance Institution Altum” may set an annual guarantee fee exceeding 0.5%.
The amendments will ensure the continuity of the guarantee programme and help maintain access to financing for farmers and other economic operators in rural areas, including in situations where there is insufficient collateral to obtain a loan or existing liabilities need to be restructured. The amendments do not affect the existing procedure for submitting applications and do not create any additional administrative burden for beneficiaries.
To ensure the continuity of the guarantee programme, EUR 3 million has been allocated from funds repaid under the “Loan Programme for Economic Operators in Agriculture, Rural Development and Fisheries” during the 2021 and 2022 transitional period for the implementation of the Latvian Rural Development Programme 2014–2020. These funds are already at the disposal of AS “Development Finance Institution Altum” and can therefore be reused to provide guarantees.
The amendments to the Regulations on the Agriculture, Fisheries and Rural Development Guarantee Programme will enter into force on the day following their publication in the official gazette Latvijas Vēstnesis.
