There is a risk of more than EUR 500 million of EU fund investments ending up unused, warns Latvian Ministry of Finance in its report on EU funds and Recovery Fund plan’s status in December 2023 – January 2024.
The plan will be viewed by the government on the 20th of February.
The ministry reports that it is working on emergency measures in order to use all possible budget options to ensure economic growth in 2024.
At the same time, the report mentions that expenses of 2024 are expected to be smaller – under EUR 505 million, because the implementation of EUR funds in 2014-2020 was by EUR 150 million better in various projects. Project delays reach approximately EUR 155 million in the EU fund 2014-2020 period. The project implementers are now working to complete their work from their own pockets or finances from the EU funds for the 2021-2027 period.
The ministry also stresses that if investments for EU fund 2021-2027 planning period are not sped up,
Latvia may lose EU funding in accordance to the European Commission (EC) regulation on failure to meet established minimum declarable targets.
To avoid losing the EU funding for 2021-2027, budget expenditures in 2025 should reach approximately EUR 750 million. This means expenditures have to grow by approximately EUR 150 million, the report mentions.
The ministry also mentions in its report that the volume of money left unused in the 2014-2020 period is approximately EUR 200 million.
Among the most notable projects that still have unused EU funding, the report mentions Latvian Railway projects (EUR 54 million), P.Stradins Clinical University Hospital (PSKUS) A2 ward construction project (EUR 30 million), Kundzinsala project (EUR 21 million), as well as Pasažieru vilciens’ new electric trains project (EUR 13 million).
At the same time, the Ministry of Finance expects to receive approximately 100% of funding from the Cohesion Fund, European Regional Development Fund, and European Social Fund in the 2014-2020 EU fund period, because the funding not used in projects and other risks are compensated by over-budgeting expenses, reallocation of funding and other sources.
In turn, the Cabinet regulations approve programmes worth for EUR 1.31 billion for the EU 2021-2027 period, which is 47% of the EUR 2.8 billion planned for 2023. The Cabinet of Ministers has regulation for EUR 1.54 billion in the works.
The report also mentions that from now on EU fund committees will discuss proposals and agreements on immediate amendments to the EU fund 2021-2027 planning period programme and other activities to ensure more optimal and faster investments.
The Ministry of Finance plans to submit to the Cabinet of Ministers a proposal for amendments to the EU fund 2021-2027 planning period by the 30th of June.
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