Latvia's recovery and resilience plan

Following an unprecedented crisis due to the pandemic, Latvia’s recovery and resilience plan responds to the urgent need of fostering a strong recovery and making Latvia ready for the future. The reforms and investments in the plan will help Latvia become more sustainable, resilient and better prepared for the challenges and opportunities of the green and digital transitions. To this end, the plan consists of 60 investments and 25 reforms. They will be supported by € 1.8 billion in grants; 38% of the plan will support climate objectives and 21% of the plan will support the digital transition.

The transformative impact of Latvia’s plan is the result of a strong combination of reforms and investments which address the specific challenges of the country. The reforms address bottlenecks to lasting and sustainable growth, while investments are targeted to the green and digital transitions, social inclusion, including healthcare, the social safety net and regional disparities. Measures also focus on skills, including digital skills, adult learning, and higher education, productivity, including research and innovation and support for business investments. Some reforms also seek to improve administrative capacity, including tax administration, public procurement and the judicial system. All reforms and investments have to be implemented within an ambitious time frame, as the Regulation on the Recovery and Resilience Facility stipulates that they have to be completed by August 2026.

The plan will foster economic growth and create jobs. It is estimated to lift Latvia’s gross domestic product by 1.3% to 2.0 % by 2026. This boost to the economy will bring up to 7000 people into jobs. Latvia will benefit significantly from the Recovery and Resilience Plans of other Member States, for instance through exports. Cross border (GDP) spillovers account for 0.5 pps in 2026. This demonstrates the added value of joint and coordinated action at European level. These estimates do not include the possible positive impact of structural reforms, which can be substantial.

+ 1.3-2%

Impact of NextGenerationEU on Latvia's gross domestic product by 2026

+ 7,000

Jobs by 2026

0.5%

Gross domestic product benefits thanks to other Member States’ recovery and resilience plans in 2026

When designing the plan, Latvia’s authorities consulted national and regional social partners and stakeholders, while pursuing a close dialogue with the Commission ahead of the formal submission of the plan on 30 April 2021. On 22 June, the Commission gave its green light to the plan. On this occasion, President von der Leyen symbolically transmitted the Commission’s assessment to Prime Minister Krišjanis Kariņš during a visit in Riga. The plan was in turn adopted by the Council on 13 July opening the door to its implementation and financing.

Green transition

Latvia’s main green climate transition challenges include the important renovation needs of the building stock to increase its energy efficiency, making mobility and the transport sector more sustainable, and improving the share of renewables in order to reverse the trend of growing energy consumption in transport and buildings.

Key measures for the green transition

Latvia’s recovery and resilience plan supports the green transition with investments to overhaul the Riga Metropolitan area transport (€295 million) by incentivising clean transport. It will also invest in the energy efficiency of private and public buildings thanks to a large-scale renovation initiative to increase the energy efficiency of residential buildings, public buildings and businesses (€248 million). The plan also includes a reform which will improve the regulatory frameworkto facilitate the deployment of onshore wind energy and reduce legal uncertainty for investments in wind power.

Example project: Overhaul of the Riga metropolitan area transport infrastructure

This project aims at reducing Latvia’s greenhouse gas (GHG) emissions emitted by the transport sector, which represents the biggest source of GHG emissions. The measure focuses on the Riga metropolitan area, which covers about 65% of the Latvian population. Its specific objective is to consolidate and rationalise the currently fragmented transport system by creating a multimodal public transport network and to incentivise the use of public transport by improving the transport infrastructure, including railways, trams, electric buses and cycle lanes.

Digital transition

Digital challenges for Latvia include improving basic digital skills, increasing the uptake of digital solutions by businesses as well as alleviating the shortage of information and communication technology specialists, which currently impacts workforce availability, competitiveness, resilience, use of government e-services and innovation alike.

Key measures for the digital transition

Latvia’s recovery and resilience plan supports the digital transition thanks to investments in the digitalisation of public administration and public services (€129 million) and by supporting the digital transformation of businesses and by creating a better environment for research and innovation with measures to improve the digitalisation of small and medium sized enterprises (€125 million). The plan includes measures to deploy high-speed broadband that should help further improve digital infrastructure (€12.5 million) and reforms in favour of digital upskilling, such as improving the basic and advanced digital skills of citizens, enterprises and public administration (€95 million).

Example project: Computer libraries

The investment consists of purchasing information and communication technology equipment for general education institutions to close the digital divide for socially vulnerable learners and educational institutions. The project aims at providing better access to learning content and at enabling a smooth running of the remote learning process for pupils and teachers by creating “computer libraries” in schools. This allows pupils and teachers who need a computer to learn and teach to borrow it for the duration of their studies.

Economic and social resilience

Key macro-economic challenges for the economy include the resilience, accessibility, quality and cost-effectiveness of the healthcare sector, the quality and efficiency of the education system and digital skills. Latvia also faces challenges in the social field (minimum income, benefitsaffordable housing) and, in the area of research and innovation and public administration.

Key measures for reinforcing economic and social resilience

The plan reinforces economic and social resilience with investments in affordable housing, whichshould also help foster labour mobility as Latvians are often hampered by a lack of housing opportunities in the places with the best employment opportunities (€43 million). Other investments will modernise healthcare, by investing in hospitals and healthcare service providers to strengthen the resilience of the health sector and to increase the availability of integrated and high-quality healthcare services (€158 million). A higher education reform will aim at improving the governance, the accreditation mechanism and the funding principles for the higher education sector (€82.5 million).

Example project: Modernising healthcare

Latvia is facing difficulties in providing timely and equal access to healthcare, especially for vulnerable groups, partly because of shortages of health workers. Therefore, the project “Modernising healthcare” aims at improving the resilience and accessibility of health care by developing a framework and necessary infrastructure for the provision of integrated health services, ensuring the capacity of health institutions to adapt to crisis situations, develop improved service delivery models and improve the provision of human resources and the professional development system for health professionals.

The plan is consistent with relevant country-specific challenges and priorities identified in the European Semester, the annual cycle of coordination and surveillance of the EU’s economic policies. For a detailed explanation of the European Semester see the following link: The European Semester explained | European Commission (europa.eu)