EU funding reallocated to COVID-19 crisis mitigation in Latvia

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On Tuesday, May 19, the government approved proposals for the reallocation of funds from the European Union (EU) to mitigate the consequences of the COVID-19 crisis, the Finance Ministry (FM) said in a press conference on May 19.

Prime Minister Krišjānis Kariņš (New Unity) said that funds were diverted from EU fund programs where projects have not been started and will not be implemente.

The proposals were prepared by a working group representing Finance Minister Jānis Reirs (New Unity). The group valued the EU funds at EUR 600 million, and it was decided to divert nearly 500 million from these to other aims. Jānis Reirs said a list of projects that the money was taken from shall be released publicly.

The proposals provide for nearly EUR 500 million of EU funds to be allocated to economic recovery measures: immediate projects to be implemented in the second half of 2020 and in 2021.

Financing of railway projects suspended by the Ministry of Transport for EUR 100 million will be channeled to health service support (EUR 30 million).

Of these, it is planned to allocate 27.4 million to the development of hospital infrastructure, including Riga East Clinical University Hospital an Riga Psychology and Narcology Center, according to the informative report from the FM.

For entrepreneurs, EUR 35 million is earmarked for working and fixed assets, EUR 20 million for employment support and EUR 15 million for skill and reorientation activities.

The financing of energy efficiency projects under the responsibility of the Ministry of Economy will be channeled to projects of energy efficiency measures for municipalities to be implemented in 2020.

Proposals for finance reallocation among ministries were also supported. Additional funding for economic recovery measures is planned at EUR 17.8 million, active employment measures and social services - EUR 43 million, retraining and skill measures for workers, general education infrastructure and the development or adaptation of digital learning and methodological tools, international cooperation - EUR 10.7 million.

The Ministry of Education and Science announced that priority measures in the field of education will receive a total of EUR 27.5 million from EU funds. EUR 16.8 million will be redirected to additional support for retraining and training of workers. 

Biodegradable waste-related measures, regional investments and ICT projects are expected to receive EUR 37 million.

EUR 283 million were allocated for passenger train development and other Ministry of Transport projects.

Proposals for alternative transport projects of EUR 283 million include investments in port, rail and broadband infrastructure, and environmentally friendly public transport. The funding will come from discontinued railway infrastructure projects.

The Ministry of Finance explained that funds are primarily dedicated to strengthening the capacity of the healthcare system by providing investments for infectology and psychiatry, as well as to support for companies providing marketable assets for export and production, modernization and economy strengthening. Investments are also directed towards mitigating the socioeconomic effects regarding employment.

Proposals for the reallocation of EU funds for COVID-19 crisis mitigation were approved on April 29 by the working group chaired by the Minister of Finance. They were developed in cooperation with ministries and social cooperation partners: Latvian Employers' Confederation, Latvian Chamber of Commerce and Industry, and the Association of Free Trade Unions.



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