Until August of this year, there has been steady progress in the implementation of European Union (EU) fund investments. At the same time, significant risks have been identified for the new transport sector investments of EU funds for the new 2021-2027 period, especially in the railway sector, inflowing into the national economy, according to the information provided by the Ministry of Finance (MoF) at the Cabinet of Ministers (CoM) meeting on Tuesday, August 20, on the EU funds and Recovery and Resilience Facility Plan investment current events, as well as the relevant government tasks for the Ministry of Transport (MoT) to take urgent action.
More than a half (55%) of EU funds 2021-2027 period investments have an approved regulatory framework for implementation, out of the total available allocation of EU funds. In addition, it is positive to note that the new investments of the EU funds and the Recovery and Resilience Facility in 2024 are predicted to cost three times more than in 2023.
Project selections of EU funds 2021-2027 period have been announced or have already been concluded for 1.57 billion euros, providing support for the infrastructure of medical facilities, small and medium-sized enterprises, business infrastructure and the construction or renovation of social housing. Projects worth 663 million euros are under implementation in the fields of employment and social inclusion, research and innovation capacity building, and payments have been made to project implementers for 74 million euros for business support (financial instruments), climate change mitigation, employment and social inclusion.
In order to increase the pace of investments and promote faster economic growth, amendments to the EU funds 2021-2027 period programme have been prepared for the reallocation of funding for investments in the amount of approximately 600 million euros. After confirmation (including in the EU Funds Supervisory Committee) MoF plans to submit the programme amendment project for approval to the CoM in the fall of 2024, afterwards ensuring that it will be officially submitted to the European Commission (EC).
At the same time, a significant risk has been identified to the successful progress of the above-mentioned programme amendments, which is caused by long-term undirected decisions of the MoT in transport industry investments, especially in the railway sector, where a total of about 401 million euros of EU funds and the Recovery and Resilience Facility funding is "frozen". MoT has informed MoF that in September this year will likely propose to the government a comprehensive vision for the reallocation of these investments. MoF cannot support investment opportunities for EU funding that are unclear for a long time and are not directed towards implementation in the economy. Therefore, the MoF proposes that the government to instruct MoT to submit EU fund and Recovery and Resilience Facility investment redistribution proposals to MoF by August 27, 2024. Accordingly, by September 27, 2024, MoF will organize a meeting of Thematic Committee on the EU Funds on solutions for the effective use of EU funds and the Recovery and Resilience Facility, including the use of funding under the control of the MoT.
The regulatory regulation for the investments of the Recovery and Resilience Facility has been approved for 1.96 billion euros, which is almost the entire available funding - 1.97 billion euros. More than 1.5 billion euros or 75.3% have been allocated to investment projects. By August 2024, a total of 83 indicators out of the 229 milestones and targets set for Latvia have been met.
As for the EU funds 2014-2020 programming period, the implementation had concluded in 2023. The last payments are being made to the project implementers, final documents for the EC have been prepared. Some projects will be completed with EU funds from the 2021-2027 period or with own funding. Latvia is expected to be able to receive 100% of the €4.6 billion of EU funds with reasonable certainty, including taking into account the budget overcommitments supported by the government in previous years.
The informative report on the current affairs of EU funds and Recovery and Resilience Facility investments until July 2024 is available on the EU funds website (LV). MoF informs the government about the implementation of the Cohesion Policy EU Funds and the Recovery and Resilience Facility once every two months.