Sunday, February 28, 2021

The coalition agrees to allocate another 500 million euros for benefits and infrastructure development


The politician said that the main issue of the meeting today was the economic stimulus package of 500 million euros. Of this amount, EUR 200 million is earmarked for families with children, another EUR 100 million is earmarked for other groups in need of such support, and a further EUR 200 million is earmarked for infrastructure development.

Kariņš pointed out that the Ministry of Welfare together with the social partners will develop a plan for which groups need support the most. “We have already spoken twice in the Strategic Steering Group about the need to identify [kuriem nepieciešams atbalsts]. Now in the coalition we agreed on the amount. The Minister of Welfare, together with cooperation partners, will offer how to specifically identify these people, ”said the Prime Minister.

According to Kariņš, the Ministry of Welfare has a vision of how this money could be distributed. “It is important to me, as head of government, that we, as a government and a coalition, work with the social partners so that the solution is the best we can achieve together,” the prime minister said.

The Minister of Justice Jānis Bordāns (JKP) added that the party he represents believes that the benefit should not be complicated by administration. “It is fair enough to support all seniors who receive state support at this point, without starting to weigh in detail who is entitled to it or not,” Bordan said, adding that the coalition would still work together to find the best solution together.

The representative of the National Association Imants Parādnieks noted that the coalition will soon agree on the scope of application of the benefit. The question of how best to implement it so that it does not have a disproportionate administrative burden and is targeted remains unresolved.

In turn, about 200 million euros, which are planned to be spent on infrastructure development, are planned to be spent on high-readiness projects, which could be launched already in June. According to the prime minister, this will directly “address the economic downturn”, as well as increase employment.

It is planned that the projects will be selected by the Ministry of Finance (MoF) in cooperation with the line ministries.

Kariņš told reporters that these funds, “like all the money that is being put into the economy at this time,” are borrowed money. “That is why we are looking to balance benefits and also money, which is aimed at long-term economic growth and employment in particular,” the prime minister emphasized.

He said all the money that has been invested since the beginning of the pandemic is money that is being borrowed in international markets. The Prime Minister noted that currently Latvia, with its good credit rating, has the opportunity to borrow very profitably, and many securities auctions have negative rates. “In such circumstances, we can borrow to invest in the economy so that the money returns to the state budget,” the politician added.

According to the information provided by the Ministry of Finance, until February 22, the Cabinet of Ministers has supported the financing of current support measures for overcoming Covid-19 in the amount of 533.7 million euros from the budget program “Contingency Funds”.

Of this amount, the Ministry of Finance has allocated 110 million euros, the Ministry of Health – 211.7 million euros, the Ministry of Welfare – 82.4 million euros, the Ministry of Agriculture – 45.5 million euros, the Ministry of Economics – 32.2 million euros, the Ministry of Defense – 12, 4 million euros.

3.3 million euros have been allocated to the Ministry of Education and Science, 1.9 million euros to the Ministry of the Interior, 17.4 million euros to local governments, five million euros to local governments, 600,000 euros to the Society Integration Fund, 100 million to the State Chancellery 000, the Ministry of Environmental Protection and Regional Development – 100 000 euros, and the Ministry of Justice – 50 000 euros.

The Ministry of Finance stated that the balance of funds for contingencies as of February 22 of this year for measures to prevent and manage the consequences of Covid-19 is 266.3 million euros.

The ministry also acknowledged that new requests for funds from unforeseen cases are being received, as well as additional requests from line ministries are expected. At present, several of them already exceed the balance of contingency funds available.

As explained by the Ministry of Finance, for example, in the amount of 182.1 million euros for support to families with children in the amount of 500 euros for each child in foster care as of March 1, 2021, as well as 134 million euros for continued support for taxpayers – downtime benefits, wage subsidies and crisis for the affected companies to ensure the flow of working capital – and 240 million euros of additional financing for the Covid-19 crisis affected companies to ensure the flow of working capital.

The MoF will encourage the government to decide that the requests for Covid-19 containment measures are one-off and time-limited, they are fully feasible in 2021, achieving the target, do not require additional funds in 2022 and beyond. The Ministry of Finance also wants ministries and other central state institutions to be responsible for compliance with the above conditions and reasonable calculations of the requested funding, and to monitor the actual use of the allocated funds.

Kariņš previously described the situation with unforeseen means as alarming.

At the beginning of the government session on Thursday, the Prime Minister touched upon the issue of the budget program “Contingency Funds”, which has funds of over 800 million euros available this year, but the money available in this program is rapidly shrinking.

“It simply came to our notice then. Requests [pēc šiem līdzekļiem] begins to grow in geometric progression, ”said the Prime Minister.

He pointed out that the budget program “Contingency Funds” is used both for contingencies, as, for example, the Ministry of Agriculture calls for funds to fight avian influenza, as well as for the program related to the Covid-19 pandemic.

Kariņš added that all contingency funds are money borrowed by the state.



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