Government okays 100 million aid for businesses affected by war

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To help companies suffering from the consequences of Russia's military aggression in Ukraine, on Tuesday, May 17, the Latvian government approved aid of €94.9 million.

The Ministry of Economics said that the aid proposals were included in a new law - the draft law on aid for combating the economic consequences of sanctions and countermeasures applied due to Russian military aggression against Ukraine. The draft law has yet to be approved by the Saeima.

The aid will use the leftover funds allocated during the Covid-19 crisis.

It is planned that economic operators who have been affected by the effects of military aggression in Ukraine, in terms of declining demand, breaking contracts, declining turnover, disruption in supply chains, price increases and a restriction on future investment, will be eligible for aid. No aid will be granted to economic operators subject to international or national sanctions.

Support to businesses will be provided in the form of financial instruments:

  • expenditure on current assets and investments of EUR 39 million;
  • guarantees of EUR 22.5 million;
  • export credit guarantees of EUR 1.3 million;
  • unused funding from the State budget of EUR 32.1 million from the Equity Fund will be directed to investments in companies to adapt their business model, improve export capacity, conquer new markets, new technologies and process optimisation and product development.

“It is necessary to provide support measures for economic operators directly affected by the economic consequences of sanctions and countermeasures imposed on Russia's military aggression against Ukraine. State aid should be provided to economic operators who are currently experiencing a significant decline in demand, termination of existing contracts, declining turnover, disruption in supply chains, price increases, and restrictions on future investments. With the support measures envisaged, we will ensure an improvement in the economic situation by encouraging market reorientation and the retention of productivity, thereby contributing to the overall sustainability of the national economy,” said the Minister for Economics Jānis Vitenbergs (National Alliance).

The new aid programs for loans, guarantees and export guarantees are scheduled to be submitted to the government by the beginning of June, while the equity fund program will be submitted by August. Support programs will be available after the adoption of the draft law by the Saeima and the coordination with the European Commission.

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