The Recovery Fund in Latvia – an opportunity for significant reforms and growth

As an economic response to the challenges created by the COVID-19 pandemic, the European Commission (EC) established the European Recovery Fund in the first half of this year. Latvia is the first of the Baltic states whose national economic recovery plan, which is a prerequisite for receiving funding from the Fund, has been approved by the  Economic and Financial Affairs Council of the European Union. In the coming months, project applications are expected to be submitted, enabling the first reforms and investments to be carried out using the budget of EUR 1.82 billion approved for Latvia from the Fund.

An instrument for the country’s economic recovery

Latvia’s Recovery Fund plan covers a broad set of mutually reinforcing reforms and investments. It will help to effectively address many economic and social challenges in areas such as healthcare, education and skills, social inclusion, research and innovation, affordable housing, public administration, the business environment, as well as combating the shadow economy and money laundering.

Particular emphasis in the plan is placed on measures that ensure the transition to an  digital and climate-friendly economic model by implementing structural reforms and addressing social and human capital development issues. The plan is aimed at ensuring Latvia’s competitiveness in European and global markets, thereby promoting people’s well-being in the long term. Investments from the Fund will be significant in strengthening an inclusive society by reducing inequality, improving education and healthcare systems, as well as access to public and municipal services.

A few steps remain before funding can be received

The next step towards implementing Latvia’s Recovery Fund plan is the conclusion of a funding agreement  with the European Commission, which is planned by the end of this summer. Immediately after the financing agreement is signed, Latvia will be able to receive pre-financing amounting to 13%, or EUR 237 million, of the total funding. In turn, Latvia will be able to attract further funds by achieving the specific targets of the projects and reforms. Latvia’s progress will be assessed every year, and funding will be available accordingly.