Further to a request from Latvia on 7 August 2020, on 25 September 2020 the Council granted financial assistance to Latvia in the form of a loan amounting to a maximum of EUR 192 700 000 with a maximum average maturity of 15 years, with a view to complementing Latvia’s national efforts to address the impact of the COVID-19 outbreak and respond to the socioeconomic consequences of that outbreak for workers and the self-employed.
(2)
The loan was to be used by Latvia to finance the short-time work schemes, similar measures and health-related measures, as referred to in Article 3 of Council Implementing Decision (EU) 2020/1351 (2).
(3)
The COVID-19 outbreak continues to immobilise a substantial part of the labour force in Latvia. This has led to a sudden and severe increase in public expenditure in Latvia in respect of new measures, namely sickness aid benefits for parents and caretakers and premiums for medical practitioners and employees dealing with the COVID -19 crisis and measures referred to in Article 3, points (a), (c), (d), (f) and (g), of Implementing Decision (EU) 2020/1351.
(4)
The COVID-19 outbreak and the extraordinary measures implemented by Latvia in 2020 and 2021 to contain that outbreak and its socioeconomic and health-related impact have had and continue to have a dramatic impact on public finances. According to the Commission’s 2020 autumn forecast, Latvia was expected to have a general government deficit and debt of 7,4 % and 47,5 % of gross domestic product (GDP) respectively by the end of 2020. In 2021, Latvia’s general government deficit and debt are forecast to narrow to 3,5 % and 45,9 % of GDP respectively. According to the Commission’s 2021 winter interim forecast, Latvia’s real GDP is projected to increase by 3,5 % in 2021.
(5)
On 11 March 2021, Latvia requested further financial assistance from the Union of EUR 112 500 000, with a view to continuing to complement its national efforts undertaken in 2020 and 2021 to address the impact of the COVID-19 outbreak and respond to the socioeconomic consequences of that outbreak for workers and the self-employed. In particular it concerns the measures set out in recitals (6) to (8).
(6)
‘Cabinet Regulation No 709 “Regulations Regarding the Allowance for Idle Time for Taxpayers for the Continuation of their Activity in the Circumstances of the COVID-19 Crisis”’ (adopted on 24 November 2020 (3) and amended on 12 January 2021 (4)) extended and amended a scheme for the compensation of idle time for workers, as referred to in Article 3, point (a), of Implementing Decision (EU) 2020/1351. That scheme applies to companies, self-employed persons and payers of the licence fee, whose income from economic activity has decreased by at least 20 %, as compared to August-October 2020 on average. The scheme pays compensation to furloughed employees or self-employed persons of 50 % or 70 % of their salaries or incomes, depending on the tax regime under which they operate. The minimim level of support is set at EUR 500 and the maximum at EUR 1 000 per employee per calendar month. Attached to the scheme for the compensation of idle time for workers is the workers’ bonus for children, as referred to in Article 3, point (c), of Implementing Decision (EU) 2020/1351.
The bonus of EUR 50 per month per child provides an additional support for idle workers who are entitled to personal income tax relief for dependants. The support measure was extended by ‘Cabinet Order No 706 of 1 December 2020“Regarding the Allocation of Funds from the State Budget Programme ‘Funds for Unforeseen Events’”’ (5) and ‘Cabinet Order No 15 of 11 January 2021“Regarding the Allocation of Funds from the State Budget Programme ‘Funds for Unforeseen Events’”’ (6). The measure can be considered to be a similar measure to short-time work schemes, as referred to in Regulation (EU) 2020/672, as it provides income support to employees and the self- employed.
(7)
The scheme for wage subsidies provides support to employers facing a decrease in revenue of at least 20 % from any economic activity. The scheme amounts to 50 % of the average monthly gross wage, but not more than EUR 500 per calendar month. The beneficiary employers are obliged to maintain employment of supported workers and to top up the wage subsidy to the full regular wage. The scheme was established by ‘Cabinet Regulation No 675 on “Regulations Regarding the Provision of Aid to Taxpayers for the Continuation of their Activity in the Circumstances of the COVID-19 Crisis”’ (adopted on 10 November 2020 (7) and amended on 12 January 2021 (8)) and ‘Cabinet Order No 128 of 26 February 2021“Regarding the Allocation of Funds from the State Budget Programme ‘Funds for Unforeseen Events’”’ (9). The measure extends the scheme for wage subsidies for the tourism and export industries, as referred to in Article 3, point (d), of Implementing Decision (EU) 2020/1351, and expands the coverage to all eligible employers.
(8)
Sickness aid benefits for parents and caretakers provide support for employees who cannot work remotely and have to look afterf children under 10 years of age or persons with disabilities when schools and day-care centres are closed due to the COVID-19 outbreak. The measure can be considered to be a similar measure to short-time work schemes, as referred to in Regulation (EU) 2020/672, as it provides income support to parents and caretakers and helps to preserve employment by preventing parents and caretakers who have to look after children or persons with disabilities while schools and day-care centres are closed from needing to terminate the employment relationship. Sickness aid benefits are provided for in the ‘Amendment to the Law “On Maternity and Sickness Insurance” of 26 November 2020’ (10) and ‘Cabinet Order No 707 of 1 December 2020“Regarding the Allocation of Funds from the State Budget Programme ‘Funds for Unforeseen Events’”’ (11) and ‘Cabinet Order No 13 of 11 January 2021“Regarding the Allocation of Funds from the State Budget Programme ‘Funds for Unforeseen Events’”’ (12).
(9)
Latvia also further extended and introduced a series of health-related measures to address the COVID-19 crisis. In particular, this concerns the measures set out in recitals (10) to (12).
(10)
An extension until 30 June 2021 of the COVID-19-related sickness benefits as referred to in Article 3, point (g), of Implementing Decision (EU) 2020/1351 was established by the ‘Amendments to the Law “On Maternity and Sickness Insurance” of 12 November 2020’ (13). The measure provides state-paid sickness benefits for those who had to miss work due to a requirement to self-isolate or self-quarantine, while usually part of the sickness benefit is shared with the employer.
(11)
Additional support is provided for health-related expenditure on personal protective equipment, as referred to in Article 3, point (f), of Implementing Decision (EU) 2020/1351. The expenditure was already implemented in 2020, including that established by ‘Cabinet Regulation No 380 of 9 June 2020“Regulations on the Resources for Ensuring Epidemiological Safety Necessary for Institutions Included in the List of Priority Institutions and Needs”’ (14).
(12)
Premiums for medical practitioners and employees dealing with the COVID-19 crisis of 20 % to 100 % of monthly salaries rewards work performed in conditions of increased risk and increased workload, as provided for in ‘Cabinet Orders No 136 of 27 March 2020 and No 656 of 6 November 2020“Regarding the Allocation of Funds from the State Budget Programme ‘Funds for Unforeseen Events’”’ (15), ‘Cabinet Order No 743 of 8 December 2020“Amendments to Cabinet Order No 655 of 6 November 2020‘On Declaring a State of Emergency’”’ (16) and ‘Cabinet Order No 37 of 21 January 2021“Regarding the Allocation of Funds from the State Budget Programme ‘Funds for Unforeseen Events’”’ (17). Those premiums are additional to the maximum premium set in the ‘Law On Remuneration of Officials and Employees of State and Local Government Authorities’. The measure supports employment by ensuring health safety of employees and continuity of essential public services.
(13)
Latvia fulfils the conditions for requesting financial assistance set out in Article 3 of Regulation (EU) 2020/672. Latvia has provided the Commission with appropriate evidence that the actual and planned public expenditure has increased by EUR 405 297 901 as of 1 February 2020 due to the national measures taken to address the socioeconomic effects of the COVID-19 outbreak. This constitutes a sudden and severe increase because it is related both to new measures and to an extension of existing measures directly related to short-time work schemes and similar measures that cover a significant proportion of undertakings and of the labour force in Latvia. Latvia intends to finance EUR 100 097 901 of the increased amount of public expenditure through its own financing.
(14)
The Commission has consulted Latvia and verified the sudden and severe increase in the actual and planned public expenditure directly related to short-time work schemes and similar measures, as well as the recourse to relevant health-related measures related to the COVID-19 outbreak, referred to in Latvia’s request of 11 March 2021, in accordance with Article 6 of Regulation (EU) 2020/672.
(15)
Health-related measures, as referred to in Latvia’s request of 11 March 2021 and in recitals (10) to (12), amount to EUR 22 304 365.
(16)
Financial assistance should therefore be provided with a view to helping Latvia to address the socioeconomic effects of the severe economic disturbance caused by the COVID-19 outbreak. The Commission should take the decisions concerning maturities, size and release of instalments and tranches in close cooperation with national authorities.
(17)
Latvia and the Commission should take this Decision into account in the loan agreement referred to in Article 8(2) of Regulation (EU) 2020/672.
(18)
This Decision should be without prejudice to the outcome of any procedures relating to distortions of the operation of the internal market that may be undertaken, in particular pursuant to Articles 107 and 108 of the Treaty. It does not override the requirement for Member States to notify instances of potential State aid to the Commission under Article 108 of the Treaty.
(19)
Latvia should inform the Commission on a regular basis of the implementation of the planned public expenditure, in order to enable the Commission to assess the extent to which Latvia has implemented that expenditure.
(20)
The decision to provide financial assistance has been reached taking into account existing and expected needs of Latvia, as well as requests for financial assistance pursuant to Regulation (EU) 2020/672 already submitted or planned to be submitted by other Member States, while applying the principles of equal treatment, solidarity, proportionality and transparency,
