Legalize2009/290/EC: Council Decision of 20 January 2009 providing Community medium-term financial assistance for Latvia
Article 1
The Community shall make available to Latvia a medium-term loan amounting to a maximum of EUR 3,1 billion, with a maximum average maturity of seven years.
The Community financial assistance shall be made available during a period of three years starting from the first day after the entry into force of this Decision.
Article 2
The assistance shall be managed by the Commission in a manner consistent with Latvia’s undertakings and recommendations by the Council. Those conditions shall be laid down in a Memorandum of Understanding. The detailed financial terms shall be laid down by the Commission in the Loan Agreement.
The Commission shall, in collaboration with the EFC, verify at regular intervals that the economic policy conditions attached to the assistance are fulfilled. The Commission shall keep the EFC informed of possible refinancing of the borrowings or restructuring of the financial conditions.
Latvia shall be ready to adopt and implement additional consolidation measures to stabilise the economy, in case such measures will be necessary during the assistance programme. The Latvian authorities shall consult the Commission in advance of the adoption of any such additional measures.
Article 3
The Community financial assistance shall be made available by the Commission to Latvia in a maximum of six instalments, the size of which will be laid down in the Memorandum of Understanding.
The first instalment shall be released subject to the entry into force of the Loan Agreement and Memorandum of Understanding.
If required in order to finance the loan, the prudent use of interest rate swaps with counterparties of highest credit quality shall be permitted.
The Commission shall decide on the release of further instalments after having obtained the opinion of the EFC.
The disbursement of each further instalment shall be made on the basis of a satisfactory implementation of the new economic programme (Economic Stabilisation and Growth Revival Programme) of the Latvian Government, included in the convergence programme, and, more particularly, of the specific economic policy conditions laid down in the Memorandum of Understanding. These shall include, inter alia:
- (a) implementation of a clearly-set medium-term fiscal programme so as to bring the general government deficit below the Treaty reference value of 3 % of GDP with a timeframe and consolidation path consistent with the Council recommendation(s) to Latvia adopted under the excessive deficit procedure;
- (b) implementation of the budget for 2009 and adoption of the budget for 2010 with sustainable measures consistent with the consolidation path;
- (c) reduction of average public sector remuneration in nominal terms in 2009 by at least 15 % relative to the original 14 November 2008 budget and a further 2 % in 2010-11;
- (d) continuing measures started in 2008 to reduce employment in central government ensuring at least a 5 % reduction by the end of 2008 and total reduction of 10 % by 30 June 2009;
- (e) strengthening the design and implementation of budgetary procedures by the adoption of a fiscal framework and budgetary reform through an amendment to the current Budget and Financial Management law;
- (f) introduction of a clear and transparent wage payment system for direct public administration employees and establishment of a single human resource planning and management system for public administration institutions;
- (g) mechanisms to ensure wider banking sector stability in the medium to longer term, including a wide range of supervisory, prudential and monetary policy measures. These should limit credit growth to sustainable levels and avoid heavy reliance on unsecured foreign funding. Targeted examinations shall be conducted in the banking system to ensure that all banks are solvent and sufficiently capitalised;
- (h) appropriate measures regarding private sector debt restructuring. The appropriate legal basis for maturity and currency restructuring of existing debt shall be strengthened. Facilitating insolvency procedures and quick implementation of rehabilitation plans shall also be made a priority;
- (i) ensuring that the remaining minority shareholders of Parex Bank do not benefit from the resolution of the bank and measures to enhance financial stability, by means of fully nationalising Parex Bank;
- (j) structural reform measures supported in the context of the Lisbon strategy and implemented in Latvia’s National Reform Programme, including active labour market and lifelong learning policies, greater involvement of private sector actors in R & D and innovation activities, export promotion measures and removal of administrative burdens for businesses;
- (k) implementation of EU-funded projects at the planned level to help improve the contribution of the tradeable sector to economic growth;
- (l) measures to improve access to financing for companies and entrepreneurs, whose applications for Structural Funds have been approved, or who may be planning to apply for Structural Funds.
Article 4
This Decision is addressed to the Republic of Latvia.
Article 5
This Decision shall be published in the Official Journal of the European Union.
OJ L 53, 23.2.2002, p. 1.
[^E0002]: (2) See page 37 of this Official Journal.
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