Financial Services, Latvia, Legislation, Loan, Markets and Companies, Port, Transport

"Any government-underwritten loan may be considered a risk to some extent. For instance, underwriting Latvian Olympic Committee's liabilities, where risk weight was 100 percent already the moment they were underwritten, and a relevant budget allocation was being planned at the same time so the committee could pay the state-underwritten loan," said Abolins.

There are several entities whose loan payments are behind schedule – the State Treasury is in talks with several small ports and small hospitals about this, said Abolins, adding however that these were small loans when compared to the state-underwritten loan taken out by the metallurgical company Liepajas metalurgs.

"The rest of the state-underwritten loans do carry some risk, but this risk is not so bad that the State Treasury would have to be considering repaying a loan in the near future in place of some of the recipients of the state-underwritten loans," notes Abolins.

As reported, at the end of July, the total amount of state-underwritten loans was LVL 467.222 million.

In July, the entire loan amount that Liepajas metalurgs had borrowed from the Italian bank UniCredit S.p.A. – EUR 67,465,056 or LVL 47,414,711 – was repaid by the State Treasury in place of the company.

State-underwritten loans have been received by Latvian Mortgage and Land Bank, Latvian Privatization Agency, Valsts nekustamie ipasumi state real estate agency, Latvijas Dzelzcels railroad company, Latvenergo power utility, Riga International Airport, municipal waste management company Vidusdaugavas SPAAO, Roja Port Authority, Skulte Port Authority, Mersrags Port, Salacgriva Port Authority, various investment projects, and the agricultural and rural development loan guarantee program for 2007-2013.

Also, eleven health care institutions have received state-underwritten laws, including Pauls Stradins Clinical University Hospital, Children's Clinical University Hospital, Riga Eastern Hospital.

Likewise, state-underwritten loans have been taken out by the Riga City Council, Latvian Olympic Committee, and an LVL 5 million loan that private company Latvijas piens took out from SEB banka.

The government decided in April that loans to private companies would not be underwritten by the state anymore. It does not concern state-owned companies though.