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High risks have been found in the implementation of the new EU fund 2021-2027 programming period

High risks have been found in the implementation of the new EU fund 2021-2027 programming period

Ministry of Finance

On Tuesday, January 23, the ministers of ministries that are involved in the implementation of European Union (EU) funds met at the thematic committee meeting of the ministers of EU funds, which was led by the Minister of Finance Arvils Ašeradens. The goal of the meeting was to discuss the status of implementation of EU funds, identified implementation risks and possible solutions. For the institutions involved in the implementation of EU funds, year 2023 was particularly intense, when in parallel with the development of investment conditions for the new EU funds 2021-2027 programming period, a series of measures had to be taken for a successful implementation of EU funds 2014-2020 programmin period, as well as work on the implementation of the Recovery Fund plan.

“Despite all of the global shocks and challenges, the good news is that Latvia has used the full €4.6 billion of 2014-2020 EU funds. At the same time, we have identified very high risks in investing the new EU funds for the 2021-2027 period in the Latvian economy as planned. The loss of future funding is absolutely unacceptable. In order to ensure the inflow of EU funds, all line ministries will have until February 2 to submit proposals to the Ministry of Finance for possible amendments to the EU Funds 2021-2027 programme," expresses Minister of Finance Arvils Ašeradens.

The allocation of EU funds for the 2014-2020 planning period in the amount of 4.6 billion euros is fully allocated to investment projects in Latvia. This was ensured by the preventive risk-compensating decisions already taken by the government - the possibility of budget overcommitments of up to 164 million euros for additional investments in new projects, as well as by using the opportunity given by the European Commission (EC) to refinance at least 60 million euros in payments to the EU fund program for heating supply support for vulnerable households and other funding redistributions.

In the 2021-2027 programming period, Latvia has €4.4 billion of EU funding available. In 2023, line ministries have drafted only half or 47% of the planned Cabinet Regulations for €1.31 billion of the planned €2.8 billion of EU funds and national funding. In this period, until January 22, 2024, 51 project selections have been launched with a total EU funding support of €788 million (16% of the EU allocation). The first 13 projects are under implementation with a total EU funding of €284 million (7% of the EU allocation).

With the Recovery and Resilience Facility (RRF), 1.97 billion euros are expected to be invested in the national economy of Latvia. On December 22, 2023, Latvia submitted a second payment request to the EC for the fulfillment of 43 indicators in order to receive EUR 335.7 million from the EC. By January 2024, a total of 61 indicators out of 229 reference points and goals set for Latvia have been met. Investment regulations have been approved for 91% of the available funding, project selection is for 66% or 1.3 billion euros, while projects for 49%, 968.4 million euros, are being implemented.

Taking into account the information above, the Ministry of Finance (MoF) has developed a roadmap for the redistribution of EU funding, which foresees the development of amendments to the Programme for the 2021-2027 programming period. Thus, by 2 February, ministries have to submit to the MoF justified proposals for investment optimization, which significantly increase investment expenses already in 2024 and in the following years meet the minimum annual declared expenses EC goals, as well as are also aimed at economic growth and solving structural challenges of the national economy. After receiving this information, MoF will consider the collected redistribution proposals and potential funding sources in the thematic committee of EU funds in March 2024. The MoF will submit draft amendments to the Programme to the Cabinet in Q2 2024.

A Ministerial Thematic Committee, chaired by the Minister for Finance, is in place from early 2023, with the aim of providing strategic leadership for the effective and intensive implementation of EU funds and the Recovery Fund. The main tasks of the Thematic Committee on EU Funds are to agree on priority investments and projects and monitor their implementation, to assess and ensure the implementation of changes in legislation and regulations, and to reduce the administrative burden..

Photos from the meeting can be found on Ministry of Finance's Flickr account here.

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