President of Latvia asked the Finance Minister to explain why despite the fact that state is offering a wide range of financial support options, people are still criticising the government and often claiming that some groups of society have been left out. As Minister Reirs explained, this phase of the pandemic is different from the previous one last spring when there were more frustrated voices. Government is constantly monitoring the roll out of various support schemes and making different adjustments along the way. For example, government has allowed employees to directly apply for support provided by the State Revenue Service without waiting on employer to do so. Government is also considering state aid for new companies opened in 2020. ‘We are doing this because that is what our economy needs, not because we are merely following the letter of the law,’ said Minister Reirs.
Pandemic has different impact on businesses and people, and President Levits urged Finance Minister to ensure that those who have been hit by the pandemic have access to timely support adequate to damage resulting from restrictions. He also urged Mr Reirs to disseminate information about additional government support to the public more actively to let everyone know exactly how each support scheme will work.
Egils Levits stressed that printed media are continuing to suffer from COVID-19 as much as in 2020 and asked Jānis Reirs if ministry has any plans to support the printed media. Finance Minister told about yesterday’s meeting with association leaders during which it was decided to offer such assistance. President Levits emphasised that Latvia needs long-term media support programme irrespective of the pandemic. In a small market like Latvia, to strengthen the information space crucial for national democracy, supporting media quality is important. Minister has scheduled another meeting with media association in February to have a deeper discussion on possible support, added Jānis Reirs.
On the Covid-19 exit strategy for the economy, one of the main topics was the planning and implementation of European Union (EU) Recovery and Resilience facility programmes. President of Latvia repeatedly urged to keep the focus on transformational potential of EU’s recovery fund for Latvia: ‘We need clear priorities to make economic transformation possible. We need expert advice on which sectors of Latvian economy have the highest potential in general instead of following the overall EU criteria, which demand each recovery plan to include a minimum level of 37% of expenditure related to greening and 20% of expenditure related to digital. We should avoid a situation where each ministry is looking for a way to fill its sector’s gaps when developing a recovery and resilience plan instead of focusing on transforming Latvia’s economy to bring it to a new level’. He also reminded about the support to research and development, which is one of the drivers of economic transformation.
‘As far as gradual greening of Latvian economy is concerned, green procurements should become a standard in public sector, any exceptions are possible only in very special cases. We should also think about creating a tax system which would reward tax payers for changing familiar patterns and switching to less environmentally-harmful consumption options,’ underlined Egils Levits. Latvia has been one of the first countries in EU to set highly ambitious climate neutrality goals and the time to look for new business opportunities offered by greening of the economy is ripe, added the Minister.
President Levits asked Minister Reirs about the progress with the new Action Plan against Shadow Economy and minister’s take on the impact of coronavirus on the structure of the grey economy since VAT fraud is no longer one of the main offences and undeclared work has become much more widespread in the economy. As minister explained, the new shadow economy plan is not ready yet, but it will, among other things, provide for appointment of sectoral coordinators responsible for overseeing the efforts to cut the shadow economy back in respective sector. Jānis Reirs also confirmed that the new plan will be based on tax reform approved in autumn and consequences of COVID-19. He also reminded that because of crisis and tax reform this will be a hard year, but the goal of the reform is to find balance between varying interests of all stakeholders on the labour market and social protection.
President Levits then raised the issue of support for improving demographic situation, including higher family benefits, and underlined that demographic situation is, however, part of much wider context and should not be limited to bigger benefits. Other measures, such as affordable housing policies, should also be considered in this context. Minister told the President that family benefits will increase from next year and government is already offering housing energy efficiency support programmes.
Egils Levits asked Minister Reirs about his thoughts on the development of national capital market, including possible participation of major municipal enterprises in the capital market. Jānis Reirs agreed that this is an area deserving additional focus due to credit crunch in the banking sector. Latvia has asked the European Bank for Reconstruction and Development to study possible scenarios for future capital market of Latvia.
