Published: 02.09.2020.

Local government borrowings in 2023

  1. Borrowings for European Union funds and other foreign financial assistance and Emission Allowance Auction Instrument projects.

    Conditions: the amount of the borrowing does not exceed the total amount of eligible costs of the project.

  2. Borrowings for European Union Recovery and Resilience Facility projects.

    Conditions: the amount of the borrowing does not exceed the total amount of funding from the Recovery and Resilience Facility fund of the project and the cost of value added tax.

  3. Borrowings for investment projects for the construction of a new pre-school educational institution or the expanding of an existing pre-school educational institution, reducing the queue of children for places in pre-school educational institutions and for investment projects in the infrastructure of pre-school education institutions.

    Conditions:
    1. The annual co-financing of the local government budget, starting from 2023, shall not be less than 10 % of the total project costs of the local government in the relevant year.
    2. Is required to receive approval from the Ministry of Environmental Protection and Regional Development (MEPRD) in accordance with the Regulations of the Cabinet of Ministers*.
    3. Local governments shall submit requests for borrowings in accordance with the established general borrowing procedures. Borrowing requests for investment projects in the infrastructure of pre-school education institutions must be submitted no later than 1 September 2023.

      * MEPRD develops regulations of the Cabinet of Ministers, which determine the procedure and criteria by which the MEPRD evaluates projects.

  4. Borrowings for investment projects of the educational institution for the implementation of a sustainable function of primary and secondary education, as well as for the school network improvement.

    Conditions:
    1. The annual co-financing of the local government budget, starting from 2023, shall not be less than 10 % of the total project costs of the local government in the relevant year.
    2. Is required to receive approval from the Ministry of Education and Science (MES) in accordance with the Regulations of the Cabinet of Ministers**.
    3. The borrowing request must be submitted not later than 1 September 2023 in accordance with the established general borrowing procedures.

      ** MES develops regulations of the Cabinet of Ministers, which determine the procedure and criteria by which the MES evaluates projects.

  5. Borrowings for the purchase of transport for the schoolchildren transportation

    Conditions:
    1. The annual co-financing of the local government budget, starting from 2023, shall not be less than 10 % of the total project costs of the local government in the relevant year.
    2. The borrowing request must be submitted not later than 1 September 2023 in accordance with the established general borrowing procedures.
    3. The maximal borrowing repayment period is 7 years.

  6. Borrowings for the road construction projects, including construction of engineering networks.

    Conditions:
    1. The annual co-financing of the local government budget, starting from 2023, shall not be less than 15 % of the total project costs of the local government in the relevant year.
    2. Is required to receive approval from the Ministry of Transport (MT) in accordance with the Regulations of the Cabinet of Ministers***.
    3. The borrowing request must be submitted not later than 1 September 2023 in accordance with the established general borrowing procedures.

      *** The MT develops regulations of the Cabinet of Ministers, which determine the procedure and criteria by which the MT evaluates projects.

  7. Borrowings for identified priority investment projects of each local government (maximum 4 projects).

    Conditions:
    1. The total amount of borrowings for the capital city Riga is EUR 6 000 000, for other local governments EUR 1 500 000.
    2. The annual co-financing of the local government budget, starting from 2023, shall not be less than 15 % of the total project costs of the local government in the relevant year.
    3. Part of borrowing which are not used in 2023, must be provided from the resources of the local government budget for 2024. The project must be completed by 31 December 2024.
    4. The borrowing shall not be granted for ensuring the co-financing part of the local government budget in other investment projects.
    5. A decision of the local government Council shall be required, which confirms the conformity of the relevant project with the development program of the local government and the implementation of useful investments for providing the autonomous function of the local government.

  8. Borrowings for budgetary and financial management. The maximal borrowing repayment period is 3 years from the date of conclusion of the loan agreement.

  9. Within the framework of the borrowing limit for 2023, local governments shall be ensured the disbursement of the granted medium-term borrowings in accordance with the concluded loan agreements.

 

Local government guarantees in 2023

Local governments have the right to provide guarantees for borrowings of local government capital companies:

  1. For the implementation of investment projects in compliance with Latvian legislation and in accordance with the established general procedures.
  2. For the purchase of fuel to ensure the heating season in local government (gas, wood chips and others).

Conditions:

  1. The maximal borrowing repayment period of the guaranteed state borrowing is 2 years from the date of conclusion of the loan agreement.
  2. The maximal deferred principal payment of the guaranteed state borrowing is 1 year from the date of conclusion of the loan agreement.
  3. Withdrawal of the guaranteed state borrowing in 2023.
  4. The Law on Control of Aid for Commercial Activity must be complied with.

Information

  • Borrowing and guarantee requests shall be submitted to the Treasury's e-service e- borrowing system in accordance with the procedures and conditions specified in regulations.

Regulations:

  • Law on the State Budget for 2023 and the Budget Framework for 2023, 2024 and 2025, section 36.
  • Law on Budget and Financial Management, including paragraph one, part six in section 41.1
  • Cabinet Regulation No. 590 adopted 10 December 2019, Regulations on Local Government Borrowings and Guarantees.
  • Cabinet Regulation No. 888 adopted 21. December 2021, Procedures by which ministries and other central state institutions include state borrowing requests in the annual state budget bill, and procedures for issuing and servicing state borrowings.