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Latvia mulls cutting number of state capital companies

Latvia has a wide range of state- and local-owned companies, or public corporations. They perform many functions, in some cases competing with private players on the market, and in others providing services under monopoly conditions. As the number of such companies is relatively large, there is a proposal in the Saeima to reduce their number, Latvian Television reported on November 26.

The Latvian State owns more than 60 different capital companies. Measured against the size of our relatively small economy, this is more than the average for other developed countries. There is therefore a possibility to reduce the number of these companies. This is the view of the Saeima Committee responsible for the issue, which has been assessing the usefulness of state-owned companies in various sectors since the summer.

The State Chancellery is responsible for the management of Latvian state capital companies. The Saeima has tasked it with dividing state-owned companies into three groups. There are commercial state companies that compete with private players on the market, such as Tet or Latvijas Mobilais Telefons. The second group consists of companies that also compete on the market, but operate mainly with budget funding.

"For example, these are capital companies in the cultural sector. For example, a theater or a concert organization. Clearly, there are other players on the market and we have to compete with them," said Dzintra Gasūne, Head of the Capital Companies Management Division at the State Chancellery.

The third group is budget-funded capital companies, which operate under monopoly conditions. It is this group that MPs believe should be examined.

The State Chancellery has until the end of next year to prepare this assessment. However, the commission members interviewed believe that the changes should take place during the current parliamentary term. Accordingly, the division of these groups will require swift and decisive action. In addition, another problem in these companies is the appointed management boards and supervisory boards. They are staffed by a large number of ministerial officials.

"I think it is an unusual situation that we have supposedly found some, I don't know, top 10, top 20 persons in Latvia, who are now all over the capital companies as if they are irreplaceable geniuses. This is definitely a matter for reassessment," says Skaidrīte Ābrama (Progresīvie), a member of the Public Expenditure and Audit Committee.

In the case of individual, smaller capital companies, it could also be assessed whether they have a need for such boards. Theoretically, by abolishing them, savings could be made.

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