ANNOUNCEMENT 24 Mar 2009

In March 2009, the government of Latvia announced a change in private-sector financial support.

NUMBER OF INTERVENTIONS

1

  • 1 harmful
  • 0 neutral
  • 0 liberalising

SOURCE



Letter from the EC to Latvia, 24.03.2009 (in Latvian)
http://ec.europa.eu/competition/state_aid/cases/225390/225390_937747_55_2.pdf


Inception date: 24 Mar 2009 | Removal date: 21 Oct 2013

Loan guarantee

On 24 March 2009, the European Commission approved the Latvian credit guarantee scheme granting aid in the agricultural and rural development sectors. The scheme is meant for farmers and processors of agricultural products who are unable to obtain a loan from a credit institution due to insufficient collaterals and who are not classified as firms in difficulty.
In those cases, they may apply for a 10-year guarantee (in some exceptions for a longer period) with the Rural Development Fund, allowing them then to obtain the desired loans. In order to obtain the loan guarantee, the benefeciaries will have to pay a one-off premium (between 0.5 and 2%) when the credit is granted.
According to the Commission, "with this guarantee scheme Latvian authorities wish to compensate up to 70% of eligible costs for primary producers including agricultural products processors investments and 70% of the eligible start-up costs incurred by young farmers engaged in primary production" (par. 9, letter from the EC to Latvia, 24.03.2009; own translation). The maximum aid intensity would be 50% with a raised limit of 60% for young farmers (within five years of setting up).
The scheme is budgeted at 355.72 million EUR and would be used by about 101-500 beneficiaries until 31 December 2013.
The list of affected sectors and tariff lines is based solely on Latvia's bilateral exports in 2008, but the list of affected trading partners was computed using both imports and exports.
The GTA includes state guarantees and other financial incentives that are likely to affect the restructuring and performance of firms facing international competition, whether from imports, in export markets, and from foreign subsidiaries.