Tag Archives: Latvia

Commission Proposes Increase of EU Funds Co-Financing for Six Countires

The European Commission has proposed to increase the co-financing rates for the EU funds for six EU countries that have been affected by the crisis.

Under the proposal, six countries would be asked to contribute less to projects that they currently co-finance with the European Union. The supplementary EU co financing is designated for Greece, Ireland, Portugal, Romania, Latvia and Hungary.

The measure does not represent new or additional funding but it allows an earlier reimbursement of funds already committed under EU cohesion policy, rural development and fisheries. The EU contribution would be increased to a maximum of 95% if requested by a Member State concerned. This should be accompanied by a prioritisation of projects focusing on growth and employment, such as retraining workers, setting up business clusters or investing in transport infrastructure. In this way level of execution can be increased, absorption augmented and extra money injected into the economy faster.

It concerns Member States that have been most affected by the crisis and have received financial support under a programme from the Balance of Payments mechanism for countries not in the Euro area (Romania, Latvia and Hungary) or from the European Financial Stabilisation Mechanism for countries in the Euro area (Greece, Ireland and Portugal). Bulgaria is not included in this scheme.



Can Latvian Financial Crisis Impact Bulgaria?

I am not an economist, but this is too important: Mary Stokes from the RGE Monitor says that a Latvian crisis would shake confidence in Bulgaria’s currency board.

The background: Latvia is currently in a deep financial crisis, and Mrs. Stokes says a devaluation of the lat is imminent. This may add pressure on the Bulgarian currency board, because Bulgaria shares a similar boom-bust trajectory to that being played out in the Baltics.

An important aspect of the problems with Latvia is the timing for entry in the ERM II mechanism.