In the first six months of 2023, €483.8 million, or 41% of the €1.2 billion of state budget funding planned for investment projects under the European Union (EU) Funds and the Recovery Fund, has been invested in the development and transformation of Latvia's economy. This is twice as much as in the first six months of 2022 (€227 million). The monthly report of the Ministry of Finance (MoF) on the EU Funds and Recovery Fund Investment Plan for May-June 2023, included in the agenda of the Cabinet of Ministers (MoM) meeting on Tuesday, 8 August, presents progress for the period May-June 2023. The pace of investment is dynamic each month.
The latest information from the MoF in July this year shows that at the end of the 2014-2020 period, €831 million, or 18% of the total allocation of €4.6 billion, can still be disbursed to project promoters this year and early next year to support projects implemented under EU funds. At the same time, there has been an increased focus on projects with different risks and their successful implementation. This is particularly the case for financially large infrastructure projects in the transport (including the purchase of electric trains, modernisation of railway infrastructure) and health sectors. The responsible ministries, in cooperation with the Central Finance and Contracting Agency (CFCA) and the MoF, are looking for the most appropriate solutions to complete the projects while maintaining EU co-financing. As one of the priority solutions, the MoF calls for assessing the possibilities of completing projects with co-financing from EU funds for the 2021-2027 period in line with the options provided in the EC guidelines.
Some recent examples of completed EU Fund projects include the purchase of environmentally friendly buses for the city of Daugavpils - six electric buses have been delivered. The benefits of using the newly purchased buses include passenger comfort and a cleaner environment, as well as lower running costs and more modern working conditions for bus drivers. The "Values of Rite Europe" project - to preserve, protect, promote and develop natural and cultural heritage. Most of the activities foreseen in the project have already been completed, e.g. in Krāslava the reconstruction of the Castle Stables - Craft House, in Preiļi the renovation of the Preiļi Castle 2. In Daugavpils, the restoration of the Engineering Arsenal Building of the Daugavpils Fortress and the escutcheon wall of the 7th Bastion of the Daugavpils Fortress have been completed, in Ludza, the conservation works of the main castle and the perimeter of the castle ruins have been completed. The landscaping of the castle mound area will be completed in the near future.
For the full launch of the EU funds’ investments for the 2021-2027 period, the responsible authorities (line ministries and the State Chancellery) still need to accelerate the drafting and alignment of the regulatory enactments in order to meet the ambitious annual plan. By 19 July, Cabinet regulations for €210.5 million, representing 6% of the 2023 plan of €3,490 million, have been approved and Cabinet regulations for €1.65 billion are in the process of being fine-tuned.
On 29 June this year, the first project submission for the Ministry of Environmental Protection and Regional Development for the 2021-2027 programming period to improve the capacity of municipalities and planning regions was approved. Project applications continue to be accepted for the 5 ongoing selections, improving household heating systems, supporting children with severe diagnosis or functional disabilities, developing infrastructure for pre-school educational institutions, reducing flood risks and developing public open space.
As planned, ministries still have until the end of the year to provide investment regulation for €464.3 million to implement the Recovery Fund. At the same time, the MoF is preparing amendments to the Recovery Fund plan for an additional €8.5 million for the variable part to reduce inequalities and €123.79 million for RePowerEU in energy, an additional €10.9 million for Brexit transfers for RePowerEU purposes, and clarification of the deadlines for certain indicators. The amendments are expected to be submitted to the Cabinet for approval and subsequently to the European Commission (EC) by 31 August this year. By the end of the year, a payment request for the 2022 Recovery Fund indicators is planned to be submitted to the EC, in order to receive €438 million in state budget revenue in 2024.
The Recovery Fund has already selected €671 million of projects by 1 August this year in areas such as climate change, digital transformation, reducing inequalities, health, economic transformation and productivity, rule of law. Projects already €602 million in the pipeline invest in strengthening healthcare infrastructure, improving regional and local road networks and modernising distribution networks.