IMPLEMENTATION LEVEL

National

AFFECTED FLOW

Inflow

ANNOUNCED AS TEMPORARY

No

NON-TRADE-RELATED RATIONALE

No

ELIGIBLE FIRMS

all

JUMBO

No

TARIFF PEAK

No
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Inception date: 16 Mar 2009 | Removal date: 14 Jan 2011
Still in force

Loan guarantee

On 3 March 2009 Latvia notified the measure "Limited amounts of compatible aid in the form of guarantees during the financial and economic crisis" - State aid #124/2009.
 
Latvia stated that the financial crisis starts affecting the real economy. The notified measure is part of a wider package of measures aimed at remedying a serious disturbance in the economy of Latvia.
 
The aid will be provided in the form of transparent forms of aid, as defined by the General Block Exemption Regulation, and in particular in form of public guarantees. To calculate the aid element of these guarantees, and in line with the possibility foreseen by the last sentence of the asterisk to point 4.3.2 (a) of the amended Temporary Framework.
 
Aid under this scheme can be granted until 31 December 2010. The scheme applies to SMEs and large companies. Latvia estimates the number of beneficiaries to be between 101 and 500 firms. The Latvian authorities estimate an overall budget of 20 million LVL (28.5million Euro)
 
The Commission stated that the notified measure constitutes state aid within the meaning of Article 87 (1) of the EC Treaty and gave the following assessment:
 
"State resources are involved in the notified scheme since the aid is granted from national resources, via the respective aid granting authority at national level. The measure is selective since it will be granted only to certain firms. The measure conveys an advantage by making available limited amounts of aid which would not be available to the beneficiaries without the measure. The measure affects trade between Member States since the scheme is not limited to beneficiaries which are active in sectors where no intra-community trade exists. The measure distorts or threatens to distort competition." (par. 22-26 of the letter from the EC to Latvia - Brussels, 19.3.2009 C(2009) 2121)
 
Article 87(3)(b) of the EC Treaty enables the Commission to declare aid compatible with the Common Market if it is "to remedy a serious disturbance in the economy of a Member State." This aid has to be applied restrictively and must tackle a disturbance in the entire economy of the Member State according to the interpretation of the Article 87(3)(b) by the Court of First Instance.
 
The Commission referred to its Communication on the financial crisis (Temporary Framework) and concluded that the Measure complies with the conditions laid therein. Therefore, despite the measure constituting State aid pursuant to the Article 87(1) EC, it is compatible with the Common Market according to the Article 87(3)(b) EC Treaty. The Commission raises no objections against the measure at issue and authorizes it as emergency intervention in the face of the current financial crisis. (par. 28-34of the letter).
 
Amendment to N 506/2009 :"Limited amounts of compatible aid in the form of guarantees during the financial and economic crisis' - State aid SA.32051 (2010/N)
 
The Latvian authorities notifiedan amendment to the approved aid scheme to include "cooperativepartnerships", which provide services to producers of agriculturalproducts (purchase, supply, distribution and transport), to the list ofeligible beneficiaries. Latvia considers that this amendment will enablethe granting authorities to respond more effectively to thedifficulties of enterprises regarding lending conditions and creditavailability. Due to the extension of the list of eligiblebeneficiaries, the Latvian authorities estimate an increase of theoverall budget to LVL 40.6 million (i.e. EUR 57.77 million).
 
A state measure in the GTA database is assessed solely in terms of the extent to which its implementation affects the extent of discrimination against foreign commercial interests. On this metric, the state aid proposed here is discriminatory.
 

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