January 23 marked three years since the approval of the government headed by Krišjānis Kariņš or the 40th Cabinet of Ministers of the Republic of Latvia. During the government’s third year of operation, it has significantly increased the funding for science, set up an investment fund for companies and implemented an administrative-territorial reform. A number of other important tasks, as set out in the Government Declaration, have also been carried out.
“We all in the government share a common goal of making our country stronger. Despite external challenges – the COVID-19 pandemic, hybrid attacks by Belarus, the concentration of Russian military forces on the Ukrainian border – over these three years we have implemented our programme to strengthen our country and increase the well-being of our citizens. The government has laid solid foundations for the country’s future development through major changes in higher education and science, the financial sector, investment attraction, administrative division and other areas. The government will continue its work and implement the changes initiated, with a further focus on economic growth, stability and strengthening of security,” said Prime Minister Krišjānis Kariņš.
Support for education, science and innovation
Last year the government agreed on the largest additional funding for science over the past 14 years. This decision resulted in an additional funding of EUR 12.2 million in 2022 for fundamental and applied research, as well as membership in the European Organisation for Nuclear Research (CERN). The initiative of the Innovation Fund’s Sectoral Research Programme has also been approved, and up to 2024, science of high achievement and research projects will receive annual funding of EUR 4 million. The projects in the field of biomedicine, medical technologies, pharmacy, photonics, intelligent materials, technology and engineering systems will be the first to receive the support.
During the third year of government’s activity, significant steps have also been taken towards achieving the priorities set out in the Government’s Declaration, such as increasing the remuneration of teaching staff, supporting students and reforming the university system. From 1 September 2021, the monthly salary rate of teachers working in general education shall be not less than EUR 830.00, while for pre-school teachers not less than EUR 872.00. A new model for financing the remuneration of general education teachers has also been developed. The role of local governments will be strengthened accordingly from September this year by providing increased financial and methodological support to teachers.
The support for students was also introduced – students from large families are now receiving social scholarships and the amount of monthly scholarships has also been increased by 40 %. Amendments to the university governance model have been adopted, and a new university typology has been established.
Support for medical practitioners
Significant investments have been made in the healthcare system in 2021; they continued in 2022, with significant additional funding for the sector. The government also agreed on a 25 % increase in the lowest monthly salaries for medical practitioners, and a total of additional EUR 183 million was transferred to salaries of medical practitioners in 2021. This year, additional support of EUR 6 million was granted for salaries of young doctors or residents, and EUR 3 million to training of nurses.
Support has been provided for maintaining psycho-emotional health of medical practitioners. Since June 2021, all hospitals have been able to hire psychologists for their staff and also launch major trainings for hospital staff on their psycho-emotional health to reduce the risk of burnout.
An investment-friendly environment
The government has also worked to increase the competitiveness, productivity and investment volume in economy. The Large Investment Fund for entrepreneurs for the implementation of large investment projects (at least EUR 10 million) has been established. With the support of this fund, entrepreneurs can return a reduced principal amount of the loan after the realisation of the projects, subject to certain criteria. As a result, it is planned to create 800 new jobs, as well as an increase in exports of three million euros per project and an influx of 250 thousand euros for research and development is also planned.
In addition, investments in the Latvian economy have been made by the Recovery Fund’s Plan that was approved by the government. Already last year, Latvia received pre-financing of EUR 237 million of the total of EUR 1.82 billion of funding approved by the EU Recovery Fund. According to the plan, these funds are already being and will further be invested in the areas of digitalisation, climate goals, reduction of inequality, health, economic transformation and productivity, as well as strengthening the rule of law.
Diverse support for citizens
In order to mitigate the negative impact of the rise in electricity prices on citizens’ ability to pay, the support for certain population groups has been increased. In 2022, the Mandatory Procurement Component (MPC) for electricity will be reduced at a faster rate, and a distribution tariff of only 50 % will be applied until 1 April. The government also approved an allowance of EUR 100 for vaccinated seniors, as well as increased state co-financing for municipal housing benefits. The government plans to decide on additional broad support measures for citizens and businesses this week.
Registration of a building in the Land Register has also been facilitated – the State fee for strengthening the property rights for natural persons has been reduced from 2 % to 1.5 % of the property value.
In addition, none of the taxes will be increased in the state budget 2022, the government continues to reduce the tax burden on labour. The VAT rate for books, periodicals and other media publications or publications in printed or electronic form, as well as their subscription fees, shall also be reduced to 5 % as of 2022.
Last year, the minimum income support for the most at-risk-of-poverty groups has also been improved and support for families with children has been increased. As of this year, the amount of the allowance for a dependent child between one year and 20 years of age will depend on the number of children in the family. The family will receive EUR 25 per month for one child; EUR 100 (EUR 50 per child) for two children, EUR 225 (EUR 75 per child) for three children. The allowance will amount to EUR 100 per month per child for a family of four or more children.
The government has also worked on how to improve the demographic situation, for example, more than 500 large families applied for the subsidy “Balsts” and received EUR 8-12 thousand for the purchase or construction of housing.
A number of measures have been put in place to improve and strengthen mental health of the population. General practitioners can prescribe up to ten state-paid consultations with a psychologist or psychotherapist to their patient. Adolescent mental health service capacity has been increased in Rīga and its development has started in Liepāja, Daugavpils and Valmiera.
Regional development and infrastructure
On 1 July 2021, the Administrative Territorial Reform became effective and 43 municipal councils started their work instead of 119. This is one of the most extensive reforms implemented by the government headed by Prime Minister Krišjānis Kariņš. By the end of last year, a number of local governments had already seen savings in resources, which could be channelled towards the implementation of initiatives of interest to citizens or the improvement of services.
Significant improvements have also been made in the state of the country’s roads, and this work will continue. The National Regional Road Construction Plan until 2027 and the Latvian State Road Development Strategy until 2040 have been approved. Work on the railway infrastructure project “Rail Baltica” has also continued, including the procurement for the construction of the main route and the design of 17 regional stations. The construction of the Ķekava bypass was launched within the framework of a large public-private partnership project.
The government has also provided systematic and targeted support to small farms, thus motivating rural populations to live in regions and not move to larger cities or abroad. Around 23 000 Latvian small farms received EUR 16 million last year through various support measures.
Internal and external security
In order to reduce the flow of illegal border crossings from Belarus organised by the Lukashenko regime, the government approved the construction of a temporary fence of 37 km on the border with Belarus, and the work is underway to install a permanent fence on the Latvia-Belarus border in 2023.
The work is also underway on the establishment of joint disaster management centres and the construction of a new depot of the State Fire and Rescue Service to ensure that the home affairs services can react more promptly and provide assistance to the population. In these premises, it is planned to host in one place the departments of the institutions of the sector and in some places also the structural units of the Emergency Medical Service.
In order to promote the involvement of young people in the defence of the state and to strengthen the sense of belonging to the state, Pulkveža O. Kalpaka Vocational Secondary School was established in Kandava on 1 July last year. In 2021, young people completed national defence training in 97 schools across Latvia.
By reinforcing our country’s external defence, the government has continued its work on the strengthening of NATO’s capabilities. On 30 November and 1 December 2021, the Meeting of NATO Ministers of Foreign Affairs was held for the first time in Rīga, where, alongside practical contribution, Latvia made a significant contribution to NATO’s political consultations and decision-making. This meeting also enhanced the understanding of the long-term need for the presence of allies in the region.
The Specialised Economic Court became operational last year to deal more effectively with complex commercial disputes, economic and financial crimes, as well as corruption cases. In the first nine months of its activity, it has already examined 197 cases, 37 civil cases, 36 criminal cases, as well as 124 proceedings relating to proceeds from crime.
Changes in the cultural sector
According to the Government’s Declaration, the public media exit from the advertising market has been implemented, and the Latvian Television and Latvian Radio have been successfully working in this format for already a year. In order to ensure the protection of the Latvian information space and a single regulatory mechanism, including media literacy, the media supervisor – the National Electronic Media Council (NEPLP) was set up and started its activities.
The government agreed last year to increase the average salary to EUR 1040 per month for 4 278 employees of various cultural institutions. These changes will affect the staff of theatres, concert organisations, museums, libraries, archives, etc.
Addressing COVID-19
The government in Latvia continued, as elsewhere in the world, to fight against the COVID-19 pandemic. In order to reduce the spread of the virus, the government provided vaccines against COVID-19 to the entire Latvian population and introduced a digital certificate for stricter compliance with safety measures. Other safety measures were also taken to prevent an increase in morbidity and thus maintain access to health services.
Since the security measures introduced had an impact on employees, the government also implemented various aid schemes for companies and employees affected by the COVID-19 crisis.
Plans for the fourth year of government’s work
As regards priority plans for this year, reducing energy expenditures for households and companies and effectively investing the funds of the Recovery Fund in sectors are at the forefront of the year’s priorities. The substantial increase in the base funding for science will help to develop research, innovation and boost their competitiveness.
Strengthening national and regional security in cooperation with the domestic military industry and NATO is equally important. In the health sector, alongside the fight against the COVID-19 pandemic, this year’s priority is the treatment of oncology patients – prevention, early diagnosis, appropriate treatment, support and rehabilitation, as well as palliative care measures.