Latvian Ministry of Foreign Affairs LATVIA TOWARDS THE EUROPEAN UNION

Government approves EU Pre-Accession Economic Programme

The Cabinet of Ministers on 12 August 2003 approved Latvia’s European Union (EU) Pre-accession Economic Programme (PEP). The document gives a rundown of those aspects of macroeconomic policy already implemented, as well as those still at the planning stage. It also sketches the scenario for economic development in the medium term and gives detailed information about the most significant structural reforms to be undertaken, setting out the measures necessary for their implementation.

This is the third time the Latvian government has elaborated the PEP. Among the key tasks included in this year’s programme are increasing the convergence of the national economy with the economies of the developed EU member states and preparing Latvia for membership of the European Monetary Union.
National economic development over recent years can been characterized by rapid growth, increased activity in all the important sectors of the economy, increased investment, and low inflation.
Labour market indicators have also shown positive changes – unemployment is gradually declining and the number of employed is rising, as is real income.
Economic growth over the coming years is linked to increased investment, the development of exports and stable growth in domestic consumption. The Program foresees an average annual GDP growth rate of 6 percent. The employment rate is expected to rise in the wake of increasing economic activity, but the most important factor i! nfluencing growth will be increased productivity. The current account deficit is expected to gradually decline following a growth in export volume exceeding that for imports.
The Programme must be submitted to the European Commission by August 16.

1 090 EU SAPARD projects approved since 2001

Since the end of 2001, when the responsibility for administering Latvia’s EU SAPARD support funds was officially transferred to the Latvian government, a total of 1 560 project applications for SAPARD funding have been submitted, of which 1 090 have been approved. 75% of the funding for each project comes from EU SAPARD funds, while the remaining 25% is in the form of co-financing contributed by the Latvian government, LETA learned from the Rural Support Service. Projects approved prior to 15 July 2003 have been valued at LVL 62.05 million.

EU experts positive about the Rural Development Plan

The Rural Development Plan elaborated by the Ministry of Agriculture has been given a positive preliminary assessment by the Danish consultancy firm Kvistgaard Consult. The European Commission selected the company to make the independent assessment. Minor changes and specifications to the Plan have been recommended.

The Ministry of Agriculture will revise the Plan before the end of August, and anticipates concluding an in-principle agreement with the European Commission before the end of this year. Implementation of the Rural Development Plan will commence with Latvia’s anticipated accession to the European Union and make it possible for Latvia to receive funding from the EU to carry out rural development projects. After accession, Latvia will no longer be eligible to receive funding for development projects from the pre-accession structural fund SAPARD.

Independent experts perform evaluation of Rural Development Plans upon the request of the European Commission in all EU candidate countries.

Ministry of Economics raises GDP growth forecast to 7%

In light of strong first-quarter GDP growth in Latvia this year, the Ministry of Economy expects that the GDP growth for the whole of year of 2003 will be as much as 7%. The Ministry had previously predicted growth of around 6%.

According to Juris Lujans, the Minister of Economics, Latvia’s economy has continued to develop rapidly in the first half of 2003. There are no major concerns regarding the country’s macroeconomic stability; Latvia’s exports are expanding in all directions, both to the European Union and the CIS states, while a wage increase of nearly 10% has been registered in the private sector.

The Minister predicted that GDP growth in Latvia would continue over the medium term in the range of 5-7% GDP p.a. (in the absence of external shocks and crises), while integration in the EU is expected to give an additional boost to economic development.

Forestry parks project receives funding under EU Phare Programme

On 9 July, a grant contract and Memorandum of Understanding were signed at the Ministry of Finance on the allocation of funding to establish forestry parks in Jekabpils and Ventspils. The signatories were the State Secretary of the Ministry of Finance, the Head of the Delegation of the European Commission to Latvia and the Mayor of the Jekabpils City Council. The project is to be financed under the subsection “Economic and Social Cohesion – Development of the Business Environment in Latvia” of the EU 2001 Phare National Programme.

The main aim of the project is to increase the competitiveness of Latvian timber processing plants and the forestry industry as a whole, through the development of effective timber processing clusters based on advanced technologies and high value-added products.

The plants in Jekabpils and Ventspils could potentially be used as training and information centres for specialists from other towns and regions in Latvia.

This is the first time both local municipalities and representatives of a relevant industry will be involved in the implementation of a Phare project.

The total cost of the project is EUR 6 060 785. The funding allocated by Phare Programme is EUR 4 170 761 or 68.8% of the total. The remainder will be provided by the state (13.8%) and the Jekabpils City Council (17.4%).

Government approves signing of the European Code of Social Security

On 29 July 2003, the Government of Latvia approved the signing of the European Code of Social Security, with the Minister of Welfare being given the mandate to sign on the government’s behalf.

The Code is one of the main instruments of the Council of Europe in the field of social security. The Code aims to achieve greater unity among signatories for their social progress and guaranteeing the minimal level of social security standards. The norms outlined in the Code only serve to determine general standards: each signatory state is free to choose the means by which to achieve them.

Signing the Code does not place any additional demands on the State Budget. Following signature, the Code must be ratified by the Saeima (Parliament). The Ministry of Welfare considers that only those articles of the Code with whose standards Latvian legislation conforms should be submitted for ratification.

Labour in Latvia among cheapest in EU candidate countries

According to data from the year 2000 issued by the EU statistical office Eurostat, the cost of labour in Latvia is among the cheapest in all the European Union candidate countries.

The average cost of labour in EU candidate countries was EUR 3.47 per hour in 2000, with the lowest costs registered in Bulgaria (EUR 1.35), Romania (EUR 1.51) and Latvia (EUR 2.42), and the highest costs in Cyprus (EUR 10.74), Slovenia (EUR 8.98) and Poland (EUR 4.48).

Government EU referendum campaign intensifies

In the leadup to Latvia’s referendum on accession to the European Union (EU) scheduled for September 20, the government Task Force Latvija Eiropa (Latvia in Europe) is launching a campaign “Nepaliec mala!” (Don’t Stay on the Sidelines!) on TV, radio and in the print media.
Launching the campaign, Head of the Task Force Ramona Umblija stressed that particular attention would be paid to engaging the public in dialogue, in order that each and every voter is able to make a responsible decision on referendum day.
The goal of the campaign is to secure participation in the referendum by as many residents with voting rights as possible. The three main target audiences for the campaign are farmers, workers and pensioners.
LVL 58 046 was allocated to develop the advertisement, LVL 154 492 for its distribution in the mass media and LVL 17 000 for its display in Latvian cities and towns.

49.6% of citizens support Latvia’s accession to EU in July

A public opinion survey carried out by the public opinion survey firm Latvijas Fakti in July 2003 revealed that 49.6% of citizens were ready to vote for Latvia’s membership in the EU that month, while 34.4% were inclined to vote against and 15.9% remained undecided.
Of the Latvian citizens surveyed, 69% said they would be participating in the accession referendum, 14.1% said they would not, while 16.9 percent were undecided. 61.7% of the citizens that said they would participate also said that they would vote for EU membership, 28.5% said they would vote against, while 9.8% were undecided.

Eight NGOs receive EUR 225 000 for EU information campaign

On 24 July, the European Commission Delegation in Latvia signed agreements with eight non-governmental organisations, granting them funding for a campaign promoting the European Union.

Altogether EUR 225 000 are to be allotted to Latvian NGOs to assist them in providing people with practical information about the EU. The EU covers up to 80% of the total cost of each project, with the remainder paid by the partner NGO. The projects are scheduled to run after Latvia’s referendum on the accession to EU in September.

A call for proposals was announced in February 2003. In total of 41 projects were submitted to the Commission.

The projects will be financed under the Phare Small Projects Programme, which has been providing funding to non-governmental and non-profit organisations for EU information campaigns and the promotion of integration into the EU since 1998.

Seminars on EU funds to be held on regular basis

Given the enormous interest in seminars on European Union (EU) funding, such seminars will from now on be held at the European Union Information Centre on a regular basis.
The number of people wishing to participate at the first seminar on 30 July exceeded the seating capacity of the Centre, prompting organisers to arrange weekly seminars.
The seminars aim to give practical information on EU funding available to Latvia both before and after accession, including application procedures. Participants at the seminar have the opportunity of meeting with people who have already implemented EU projects.


Funding allocated for organisation of public discussions on EU in Russian

At the outcome of a competitive tender process, the European Integration Bureau and the Danish Embassy in Riga have allocated LVL 2000 to the Independent Association for Democratic Values and Integration to assist with the organisation of discussions in Russian for Russophone NGOs on Latvia’s accession to the European Union. The main aim of the discussions will be to involve more Russophone nongovernmental organisations in dialogue on the European Union accession. The public discussions will be held on 22 and 23 August, with around 30 nongovernmental organisations and representatives of state institutions expected to participate.


In May 2003, seasonally adjusted industrial output increased by 6.6% compared with May of the previous year. This was made up of a 7.4% increase in manufacturing and an 8.1% increase in electricity, gas and water supply. Output from mining and quarrying, however, decreased by 25.8%. Increases were observed in the manufacture of fabricated metal products (+28.3 %); machinery and equipment (+27.8%); wood and wood products (+15.1%); the furniture (+13.0%); basic metals (+12.8%); pulp, paper and paper products (+10.3%), and electrical machinery and equipment (+8.1). (Central Statistical Bureau)

Latvia’s economic activity index was 10.8% higher in May 2003 than in the corresponding period of last year. The increase has mainly been due to growth in budget revenue intake, industrial development and the volume of cash in circulation. The index was up 9.7% compared to April 2002. All in all, the economic activity index rose by an average of 10.4% last year. (BNS)

Retail trade turnover in may 2003, including wholesale of automobiles, parts and accessories (at current prices) reached LVL 231 million. Compared with April, retail trade turnover increased by 11% in May at constant prices; seasonally adjusted data, however, show that retail trade turnover in May has actually only increased by 7%. The May figures showed an increase of 12% (at constant prices) in comparison with May 2002. (Central Statistical Bureau)


Parliament of Latvia EU Information Centre
Central Statistical Bureau
European Commission Delegation in Latvia
European Union Information Centre
Management Group for EU Accession Pre-referendum Campaign

Newsletter “Latvia towards the European Union” is a compilation of press releases and news reports drawn from the mass media and official sources.
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