Government consolidates funding bodies

The Cabinet of Ministers approved plans Tuesday to create a newly combined Development Financing Institution (AFI), to be 40% owned by the Finance Ministry, with the Economics and Agriculture Ministries each taking with a 30% share.

The consolidation of the limited resources available for government support and development programs unites the previously separate Latvian Guarantee Agency (LGA), the Rural Support Fund (LAF) and the Latvian Development Finance Institution Altum, spun off from the Mortgage and Land Bank of Latvia as of January 1, 2014.

As newswire BNS learned from Finance Ministry state secretary Baiba Bane, a special law still has to be passed in order to ensure the launch of the AFI on August 15 when it is to receive a capital infusion the amount of which will become known in the coming weeks.

Bane explained that the support funding to be provided by the AFI is intended to promote start-up enterprises, enhance competitiveness, promote self-employment, support agriculture, regional development and energy efficiency, among other goals.

Rather than competing with commercial banks for the small business loan market, the AFI would finance the types of businesses otherwise less eligible to enter into commercial borrowing arrangements. The forms of financial instruments would include guarantees, loans, and other sources of venture capital.

The AFI is supposed to begin implementing government support programs planned for the 2014-2020 EU funding term by the end of this year.

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