Published: 02.09.2020.

Local government borrowings in 2025

  1. Borrowings for European Union funds and other foreign financial assistance projects.

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

  1. Borrowing for projects financed by the European Union Recovery Fund.

Conditions: the amount of the borrowing does not exceed 110% of the total amount of the project's Recovery Fund financing and VAT (value added tax) costs.

  1. Borrowings for projects financed by the Emission Allowance Auctioning Revenue Instruments: Emission Allowance Auction Instrument (EKII) and the Modernisation Fund.

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

  1. Borrowing for investment projects for the construction of a new pre-school education institution or the expansion of an existing pre-school education institution, reducing the waiting list for places in pre-school education 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 2025, 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 Smart Administration and Regional Development (MoSARD) in accordance with the Regulations of the Cabinet of Ministers*.
  3. The borrowing request must be submitted not later than 1 September 2025 in accordance with the established general borrowing procedures.

 

  1. 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 2025, shall not be less than 10 % of the total project costs of the local government in the relevant year, except for the construction of a new educational establishment.
  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 2025 in accordance with the established general borrowing procedures.

 

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

Conditions:

  1. The annual co-financing of the local government budget, starting from 2025, 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 2025 in accordance with the established general borrowing procedures.
  3. The maximal borrowing repayment period is 7 years**.

 

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

Conditions:

  1. The annual co-financing of the local government budget, starting from 2025, 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 in accordance with the Regulations of the Cabinet of Ministers*.
  3. The borrowing request must be submitted not later than 1 September 2025 in accordance with the established general borrowing procedures.

* Cabinet of Ministers Regulation No.879 of 17 December 2024 “Regulations on the Criteria and Procedure for Evaluating Applications for Loans from Local Government Investment Projects”. 

** Cabinet of Ministers Regulation No 888 of 21 December 2021 “Procedures for the Inclusion of Requests for State Loans in the Annual State Budget Bill by Ministries and Other Central State Institutions and the Procedure for Issuing and Servicing State Loans”, Para 12 .

 

  1. Borrowings  for internal security investment projects - building and improving police infrastructure.

Conditions:

  1. The annual co-financing of the local government budget, starting from 2025, 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 Smart Administration and Regional Development (MoSARD) on the project's compliance with the local government's development programme and the project's necessity for the sustainable provision of the local government's autonomous function.
  3. The borrowing request must be submitted not later than 1 September 2025 in accordance with the established general borrowing procedures.

 

  1. Borrowings for investment projects for the improvement and reconstruction of drainage systems, as well as investment in urban stormwater and water drainage systems.

Conditions:

  1. The annual co-financing of the local government budget, starting from 2025, 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 Agriculture on the integration of the local government drainage system and urban stormwater drainage system into the overall drainage system and ensuring its functionality in the respective local government.
  3. The borrowing request must be submitted not later than 1 September 2025 in accordance with the established general borrowing procedures.

 

  1. Borrowings for identified priority investment projects of each local government, including the continuation of ongoing projects (maximum 4 projects).

Conditions:

  1. The total amount of borrowings for the capital city Riga is EUR 8 000 000, for other local governments EUR 1 500 000.
  2. The annual co-financing of the local government budget, starting from 2025, 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 2025, must be provided from the resources of the local government budget for 2026. The borrowings shall be disbursed in 2025-2026.
  4. The borrowing shall not be granted for ensuring the co-financing part of the local government budget in other investment projects.
  5. The loan shall not be granted for the purpose of providing the co-financing part of the local government's budget in the projects referred to in points 4-9.
  6. 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.

 

  1. For the establishment of shelters, including the adaptation of premises in the administrative territory of the local government to the needs of shelters.

Conditions: Is required to receive approval from the Ministry of Interior on the functionality of the shelter for ensuring security.

  1. Riga State City local government for the project "Traffic Overpass from Tvaika Street to Kundziņsala", in accordance with the conditions set out in Article 17 of the Law On State Budget for 2025 and Budget Framework for 2025, 2026 and 2027.
  2. Borrowings for budgetary and financial management. The maximal borrowing repayment period is 3 years from the date of conclusion of the loan agreement.
  3. Within the framework of the borrowing limit for 2025, local governments shall be ensured the disbursement of the granted medium-term borrowings in accordance with the concluded loan agreements.

 

Local government guarantees in 2025

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 2025.
  4. The Law on Control of Aid for Commercial Activity must be complied with.

 

Information

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

Regulations:

  • Law on the State Budget for 2025 and the Budget Framework for 2025, 2026 and 2027, section 38.
  • Law on Budget and Financial Management, including paragraph one, part six in section 41.1
  • Cabinet of Ministers Regulation No. 590 of 10 December 2019, Regulations on Local Government Borrowings and Guarantees.
  • Cabinet of Ministers Regulation No. 888 of 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.
  • Cabinet of Ministers Regulation No. 879 of 17. December 2024, Regulations on the Criteria and Procedure for Evaluating Applications for Loans for Local Government Investment Projects.