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Questions and Answers on Latvia's disbursement request under NextGenerationEU
How did the Commission assess Latvia's first payment request?
On 17 June 2022, Latvia submitted to the Commission a request for the disbursement of €201 million under the Recovery and Resilience Facility (RRF). The request was based on the achievement of the nine milestones, as outlined in the Council Implementing Decision, for the first instalment. The milestones cover reforms and investments in the areas of the minimum income support system, the adoption of a common model for the development of the last mile broadband connection (to ensure end-user's access to very high capacity broadband network in regions and rural areas), the regulatory framework for improving the competition environment and reducing corruption risks in public procurement, remote learning, the prevention of money laundering and terrorist and proliferation financing as well as social housing. In line with the RRF Regulation, the Commission had up to two months to carry out its preliminary assessment of the request.
With their request, the Latvian authorities provided detailed and comprehensive evidence demonstrating the fulfilment of the nine milestones included in the Council Implementing Decision on the approval of the assessment of the Recovery and Resilience Plan for Latvia. The Commission has thoroughly assessed this information before presenting its positive preliminary assessment of the payment request.
What are the next steps?
The Commission has now sent its positive preliminary assessment of Latvia's fulfilment of the milestones required for this payment to the Economic and Financial Committee (EFC), asking for its opinion. The EFC's opinion, to be delivered within a maximum of four weeks, should be taken into account in the Commission's assessment. The Commission will adopt the final decision on the disbursement of the financial contribution, in accordance with the examination procedure, through a comitology committee. Following the adoption of the decision by the Commission, the disbursement to Latvia would take place.
The amounts disbursed to Latvia, as with all Member States, will be published in the Recovery and Resilience Scoreboard.
How do the milestones achieved by Latvia so far effectively support the green transition?
The milestones included in the first payment request are focused on other pillars of the RRF. However, Latvia has already started to implement some of the reforms and investments under the second payment request which bring a strong contribution to the green transition. These include several investments supporting the energy efficiency of public and private buildings as well as reforms to improve the fire rescue service and better protect the environment against fires. Work on the greening of the Riga Metropolitan Transport System has also started.
How do the milestones achieved by Latvia so far effectively contribute to the digital transition?
Three milestones achieved for this payment request contribute to the digital transition in Latvia. The first milestone constituted the adoption of a framework for the organisation and implementation of remote learning in educational institutions, which will contribute to closing the digital divide for disadvantaged pupils by expanding their access to learning opportunities. Two other milestones contribute to the digital transition: on the one hand, the adoption of a common model for the development of the last mile broadband connection (to ensure end-user's access to very high-capacity broadband network in regions and rural areas), based on an analysis of the potential market for very high-capacity networks. On the other hand, the adoption of technical requirements for connected and automated driving. The latter milestone will allow for the development of a route for connected and automated driving alongside the Latvian section of the Via Baltica corridor, a railway connecting Estonia, Latvia and Lithuania to Poland and the Czech Republic.
How do the milestones achieved by Latvia so far contribute to improving Latvia's economic and social situation, including its resilience?
The rapid ageing and the decline of the overall population underpin Latvia's key sectoral challenges like regional income disparities and unequal access to services, subdued investment, including in housing, and inefficiencies in the public administration.
One of the most ambitious reforms under the RRP is related to the introduction of inflation indexation of minimum income benefits to reduce inequality, improve the social safety net and foster social integration and inclusion in Latvia. To pave the way towards the implementation of the reform, a milestone on a strategic framework for further development of the minimum income support system has been achieved. Latvia has also accomplished steps to improve the country's affordable housing offer by amending existing rental legislation to facilitate the development of a low-rent housing fund.
The education system needs consolidated resources, improved quality of teaching and efficiency in the management of funding. While a reform of the governance for higher education institutions is ongoing, Latvia has also established a legal framework to optimise and incentivise a better performance of pupils in secondary schools, by linking funding to the fulfilment of quantitative and qualitative criteria. Latvia has also achieved a milestone on a regulatory framework laying down procedures for the organisation and implementation of remote learning. The technical requirements put forward in support of automated and connected driving will also contribute to expand sustainable mobility.
Finally, to bolster public procurement performance and strengthen the anti-money laundering framework, Latvia has achieved three milestones under the RRP amending the existing law on the prevention of money laundering, establishing a regulatory framework for improving the competition environment and reducing corruption risks in public procurement. It has also adopted a set of criteria aimed at identifying risky market sectors, customers and purchases.
Does the achievement of these first milestones contribute to an effective implementation of the plan?
The milestones fulfilled constitute significant steps in the implementation of Latvia's recovery and resilience plan, and of its broader reform agenda. The payment request covers key reforms and investments in the areas of the minimum income support system, broadband infrastructure, educational institutions infrastructure and remote learning. Other areas covered are public procurement, prevention of money laundering and terrorist and proliferation financing. Moreover, a new rental law balancing the rights of tenants and landlords has been adopted.
The Cabinet of Ministers of Latvia has laid down the procedures for an effective implementation and monitoring of the recovery and resilience plan. The control system and arrangements used for the implementation of the recovery and resilience plan are based on robust processes and structures used in the existing national framework for the implementation of structural funds. The main coordination role is assigned to the Ministry of Finance of Latvia.
Why did Latvia present these nine milestones for its first payment request?
The milestones and targets to be included in each payment request are set out in the Council Implementing Decision approving the relevant national Recovery and Resilience Plan. In the case of Latvia, this Decision provides for the first instalment linked to the nine milestones that Latvia has now achieved. While the Member States can decide when to submit a payment request for each instalment, they cannot unilaterally amend the milestones or the number of milestones linked to each instalment.
For More Information
First payment preliminary assessment for Latvia
Press release: € 237 million in pre-financing to Latvia
Questions and Answers: Latvia's €1.8 billion recovery and resilience plan
Factsheet on Latvia's recovery and resilience plan
Recovery and Resilience Facility
Recovery and Resilience Scoreboard
Recovery and Resilience Facility Regulation