Budget, Financial Services, Funds, Latvia, Loan, Markets and Companies

Regardless of whether the loan will be taken by the government or a state-owned company, this is going to be public expenditure and the government debt. Considering that Latvia has to keep to the prescribed budget deficit limit, it means that allocations to some other sector will have to be cut therefore borrowing is not a solution for renovation of Latvian roads, he said.

At the same time, Transport Ministry's parliamentary secretary Edgars Tavars defended borrowing as a good solution, saying that, in view of the annual depreciation of roads alone, loan interest payments would be a better option.

As reported, the Latvian government has in principle approved gradual increase of financing for road maintenance and renovation. But the proposal for re-establishment of the State Highway Fund as a special budget was rejected. Instead, legislative amendments have to be prepared by April 30, 2017, to increase allocations for road maintenance from the general revenue by at least 5% every year, provided that the nominal GDP is expected to increase by no less than 5%t in the given year.

By August 31, 2017, the Transport Ministry in cooperation with the Finance Ministry have to submit to the government a report about the options for raising additional financing for road maintenance and renovation, for example, through public-private partnership, while keeping the fiscal discipline.