Poor EU funding management leads to plan revisions in Latvia

Misfortunes in the previous European Union funding period, including the delayed delivery of new trains and other frictions, have led to a revision of funds and plans to possibly abandon some transport development projects, Latvian Television's De Facto reported on Sunday, February 4. 

In order for entrepreneurs, different programs, intentions, and structures to find support funding from European funds, ministries must carry out preparatory work, including writing rules for a more specific distribution of money.

Previously, it was planned that by the new year, rules would be written to distribute EUR 2.8 billion, however, there is clarity for only EUR 1.31 billion.

Data compiled by the Ministry of Finance as of mid-January shows that the worst performance is currently shown by the Ministry of Transport. Its funding is also the biggest. By the end of the year, the rules should have been clear for allocating around a billion euros, but there is clarity for just 21.2 million. The Ministry of Transport admits that there has been too much optimism in the past, which affects processes.

“Now, as a domino effect - those projects are being delayed one by one and therefore against the overall backdrop, yes, the Ministry has the biggest delays, it cannot be denied, but it should also be noted that it has the biggest commitments.“When you look at the same schedule, you can see that no other Ministry had that much, such a large envelope, the ambition wasn't that great, and with that, unfortunately, came the delays,” said Jānis Meirāns, adviser to Transport Minister.

The failures of previous years, both with train delivery and by rebuilding the railways and their platforms, mean that these works of about 260 million will be financed by the new period's money. In turn, this means that other pre-planned expenditures will have to be abandoned. Projects that have come to the Ministry's table are the continuation of Dienvidu Bridge and Rīga bypass, which might be abandoned for now.

The Ministry of Transport's plans are opposed by Rīga municipality - it has adopted the new budget, which has allocated EUR 44 million for the fourth round of the Dienvidu Bridge. However, if they do not have the previously planned EUR 74 million of funds, the city will not be able to complete the bridge itself. Nor would it begin to build without knowing whether there would eventually be funding from the funds in return.

The Ministry of Education and Science (IZM) is also lagging in its work. It has not prepared the rules for the further division of EUR 160 million in due course. IZM doesn't plan to give up its programs, nor does it worry that something might not be done.

The only ministry which has done even more than planned so that funds money can enter the economy is the Ministry of Environmental Protection and Regional Development.

“I would like to say we have a very good civil service in this area. This shows how important it is for the civil service to be quality, knowledgeable, target-oriented,“ said Inga Bērziņa, Minister for Environmental Protection and Regional Development (New Unity).

With large investments being delayed, there could be issues in the implementation stage. This is also evidenced by sad examples such as delays and other problems with the structures of the new building complex of Stradins Hospital or the disaster centers of the Ministry of the Interior.  The previous period, which ended this year, showed that by putting too much aside for the last moment, money may have to be spent in a great hurry, losing quality and even investment sense. For example, part of the funds were allocated to cover heating bills.

Of the 4.4 billion euros allocated by the European Union, only 13 projects were practically launched in Latvia by the beginning of the year, totaling 284 million euros. The selection of 51 projects with total support from European Union funds of EUR 788 million has been launched.

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