Analytics, Baltic States – CIS, Financial Services, Latvia, Legislation, Markets and Companies, Security

"Due to political tension, the government had to re-evaluate priorities and address all the major issues through the prism of security. Recognizing that country's future is directly linked to reasonable political activity, the government adopted a number of important security related decisions. We addressed the strengthening of the country's external security by adopting a number of strategic decisions; we took substantial steps towards improving the country's internal security, as well as, of course, being concerned about wellbeing of the people, made decisions on significant improvements in the social security mechanism. In addition, several important measures have been taken to strengthen economic security. This government has laid a good foundation for further work of the next government for the good of Latvia and its people," acknowledged Prime Minister Laimdota Straujuma under whose guidance the government took office on January 22, 2014.

In view of geopolitical tension, the government has agreed to start cooperation with the UK Ministry of Defence on the implementation of the Ground Forces Infantry Brigade Mechanization Project. In response to foreign policy events, the government also paid close attention to national security issues with a focus on the strengthening of the national defence system, the National Armed Forces, as well as the National Guard, with a commitment to increase the defence budget up to 2% of GDP.

One of the most important accomplishments in promoting wellbeing of the people to be mentioned is the indexation of pensions, scheduled on October 1, 2014. An equal part – 285 euros will be indexed for pensions. Targeted measures are being taken to promote employment for those groups of residents, which have difficulty in finding a job, for example, the long-term unemployed, young people, people with disabilities, incl. providing the support to former employees of the JSC Liepājas Metalurgs. Thus, the employment rate has increased.

This year the Partnership Agreement for the European Union Funds Programming Period 2014 – 2020 was signed that outlines the strategy, priorities of Latvia, as well as the procedure for effective and efficient use of the EU funds in the new programming period 2014-2020, providing an investment of 4,418 billion euros in employment and growth of Latvia.

After the Zolitūde tragedy, the reforms have been implemented and the regulatory framework has been substantially improved in the field of construction to ensure lawfulness, safety and quality in all stages of construction and operation of buildings, as well as professional liability of construction experts. The government has also supported the establishment of the Latvian Construction Council with the aim to encourage public involvement in developing and implementing the construction policy.

In view of events related to current Russia-Ukraine conflict, and the uncertain future development of the situation, there are apparent risks in the Latvian economy, which require reconsideration of economic growth for the coming years. Latvia is committed to maintaining a sound and prudent fiscal policy, as a result of which, the fiscal targets for next three years envisage gradual improvement, ensuring that the structural deficit of the general government budget does not exceed – 1.0% of GDP in 2015, 0.9% of GDP in 2016, and 0.8% of GDP in 2017. Significant support of 6 million euros has been granted to milk producers, the Instruction of the Cabinet of Ministers on the application of the "Green" procurement has been adopted in support of local producers, as well as amendments of the CoM to laws and regulations have been submitted to reduce administrative burden for the fields of transport and logistics.

The government has regularly dealt with issues related to the insolvent joint-stock company Liepājas Metalurgs. The Cabinet of Ministers has issued a mandate to Minister for Finance Andris Vilks to sign, on behalf of the state, an agreement with other creditors on sale of Liepājas Metalurgs that will take place in the first week of October.

The issues related to attracting investors to Citadele Bank have been on the agenda of the government. Currently, the negotiations with investors on the conditions of the purchase agreement, incl. technical matters, are going on. The final decision on the share purchase agreement will be made after concluding negotiations on all conditions.

In the field of the interior, the amendments to the Criminal Code have been developed and have already become effective, which lay down responsibility for unauthorized manufacture and marketing of the new psychoactive substance.

In the field of education, the work was begun on developing a new model for calculation of work pay for pedagogues. In addition, from 1 September 2014, free lunch is provided for pupils in grades 1-3. A step forward has been taken also regarding the implementation of structural reforms – the informative report "The Implementation of a Structural Reform in the Latvian Science until July 1, 2015" has been drafted, providing the measures for improving the regulatory framework and governance of science, functional and territorial consolidation of scientific resources.

In the field of health, a three-year plan for improving quality of primary health care has been approved, strengthening it as a more accessible, efficient and most comprehensive health care level and increasing its role in the prevention, diagnosis and treatment.

The work has been completed and the building of the National Library of Latvia is put into operation. In collaboration with partners in Latvia, Lithuania and Estonia, the work will continue on the implementation of the ambitious project "Baltic Way Stories", dedicated to the 25th anniversary of the Baltic Way.

Given the current situation in Latvia where outbreak of the African swine fever was found, it was important to provide prompt and adequate emergency notification and follow-up. In addition to the emergency situation, the Rural Development Programme for the period 2014-2020 was developed together with the farmers' NGO and submitted for approval to the European Commission. It will provide and contribute to income, competitiveness of farmers, rural entrepreneurs, foresters, as well as agriculture and rural development for the next seven years.

This year the Baltic States have agreed to establish a joint venture for the implementation of the Rail Baltica project where Latvia's shareholder will be a newly established 100% state-owned capital company. In addition, in order to improve road safety and reduce the road traffic injuries and deaths, and to improve competence and responsibility of traffic participants, the Road Safety Plan for 2014-2016 was developed and approved.

In implementing a number of public administration reforms, the government supported the draft law on the State service developed by the State Chancellery. It envisages substantial changes in the human resource development policy in public administration, encouraging a professional and politically neutral state service. Also the selection procedure of candidates for posts of the board and council members in state-owned companies where the state as a member or shareholder has the right to nominate for above-mentioned positions is being improved.

Active preparations for Latvia's Presidency of the Council of the European Union in the first half of 2015 are going on. The General Affairs Council approved the Trio Presidency's working program developed based on the contributions of Latvia and other partner states – Italy and Luxemburg. Substantial efforts are made to ensure that Latvia joins the Organization for Economic Cooperation and Development (OECD), which is a major world economic forum.