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Monday 21.08.2017 | Name days: Linda, Janīna
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Economic Diary. Lend the state some money

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Baltic news, News from Latvia, BNN.LV, BNN-NEWS.COM, BNN-NEWS.RUOn the eve of the long vacation, the Latvian Economy Ministry announced multiple business support programs.

Preserving balance

The first support programme – High added value investments – is set to begin this year. This will be its third stage. As part of it, it is not planned to expand its existing capacity, but to develop new products and finish active projects. The maximum funding for each single company is estimated at LVL 700 thousand at the moment. It is planned to support 30-40 projects.

Economy Minister Daniels Pavluts believes that balance should be preserved between the growth of productivity and salaries, so that Latvia would be able to reach EU standards of living in the future. He believes the country should avoid having fat years all over again.

Helping big projects

The second support program provides the creation of an unprecedented government level co-investment instrument. It is scheduled to launch next year. Up until now Latvia offered companies support programs funded by EU funds. But different limitations prevented them from satisfying the needs of specific investors. These limitations made them [investors] turn to other countries.

Latvia’s national policy on the country’s industrialization mainly suggests changing this approach. Pavluts believes this will give the state a support instrument that will be used to develop the manufacturing industry and create jobs in Latvia. The processing industry is regarded as the target industry for this initiative.

It is planned to be used to support large investment projects and be registered as a grant for construction of industrial structures or capacity increase. Companies registered in Latvia and organizations that service municipal or government infrastructures will be able to compete for it. It is planned to have the budget of 2014 allot LVL 10 million for this initiative. It will help support the development of two or three large investment projects.

Looking after the little guy

The government also launched one more support program this week. It will allow no less than 100 companies to receive loans up to EUR 25 thousand big in the next couple of years. The reason for the launch of this program is that the Mortgage Bank will no longer service issue of micro-loans to companies this year. However, as the general economic activity of businessmen increases, so will their need for funding.

The plan of the Economy Ministry suggests that the Latvian Guarantees Agency and the country’s commercial banks will take up this cup. The latter will be the main difference between this initiative and the current order. Seeing as how commercial banks will be in charge of providing loans, seekers will need to come up with co-funding. The amount provided by the state – EUR 5 million – will be doubled as a result of this. The number of companies in Latvia is close to 400 – given that the provided loans for single companies are not to exceed EUR 25 thousand. It is possible that the number of eligible companies may prove to be larger in reality.

State debt is defined by payments

Finally, one last innovative thought tied to loans. This one faces the people-state direction. It was initiated this week. Latvian residents are now able to lend the country money: the long-promised savings bonds have been made available to the residents. This initiative is expected to attract more than LVL 100 million in a matter of year. This does, however, include low interest rates: 0.3% for one year, 1.8% for five years and 3.25% for ten years. According to Finance Minister Andris Vilks, this instrument is made especially attractive in comparison to other investment investment options by its iron stability: unlike bank deposits, it guarantees the whole amount.

The first Latvian state bonds are available for purchase at the main website www.kraijobligacijas.lv (only available digitally).

In order to become a client, all a person needs to do is authorize using an internet bank, pick his or her preferred amount and term. The nominal price of a single bond is LVL 1, the minimum price of a transaction – LVL 30. The cap for a single transaction is set at LVL 49 thousand for bonds of a single kind. These bonds will not be allowed to be re-sold or given to someone else (it will be possible to inherit them).

Ref: 017.109.109.7927


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  1. Ilmars says:

    How much money is going to wind up in bankrupt companies like Air Baltic and LM ?
    Will there be independant oversight so that money goes to viable companies and not political cronies ?
    Will there be transparency on where this money goes ?
    Given the IMF bailout 5 years ago , the track record of the Latvian Government in managing money is less than complimentary.
    Lend the state some money ? Will I ever see my money again .

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