The first government headed by Prime Minister Krišjānis Kariņš took office on 23 January 2019. Despite major global challenges such as the COVID-19 pandemic, Russia’s war against Ukraine and high inflation, this government also triggered long-awaited processes. Administrative territorial reform, introduction of a deposit system, transition to learning in the official language constitute only part of the work accomplished.
The second government headed by Krišjānis Kariņš was approved on 14 December 2023 and during its term of office enhanced the country’s energy independence, continued significant investments in strengthening national security, introduced the State Defence Service, as well as started work on the implementation of changes in the health and education sectors.
“As I look back at the time when the Saeima entrusted me with the Prime Minister’s duties, I am pleased to say that Latvia has further pursued the path of development – despite the challenges posed by the financial sector’s supervisory crisis, the COVID-19 pandemic, the hybrid attack by the Belarusian authoritarian regime on the border of Latvia and Russia’s full-scale invasion of Ukraine, we are becoming stronger and more prosperous. It must be continued in the future,” said Krišjānis Kariņš.
Internal and external security
Even before changes in the geopolitical situation, the government took decisions that strengthen national security. Together with allies, it decided to increase in number NATO’s enhanced presence in Latvia and establish a multi-national division headquarters in Latvia. A decision was taken to create a new military landfill site ‘Selonia’.
During the term of office of these governments, the scope of military exercises was expanded and the capacity of the National Armed Forces was built. The Comprehensive State Defence System has been developed and implemented. The State Defence Service has also been established, and the first conscript soldiers have successfully commenced the service. Latvia’s Cybersecurity Strategy has been approved and an action plan has been developed for it.
The Internal Security Academy was established with a view to strengthen country’s internal security and started work on 1 September this year. This Academy will provide the services responsible for national security with highly qualified experts, investigators. Work on the establishment of the National Police Centres in Riga is underway, thus the outdated units from the Soviet era will be abandoned.
A comprehensive model for Disaster Management Centres (CMPs) has also been developed. These CMPs will bring together the State Police, the State Fire and Rescue Service, the Emergency Medical Service, as well as other responsible services. The first two CMPs were opened this year, however a total of 34 such centres will be established throughout Latvia by 2027.
Construction of the country’s external land border infrastructure continued. In order to prevent the flow of illegal border crossings organised by the Lukashenka regime, the pace of infrastructure construction on the Latvia-Belarus border was particularly accelerated. At present, 72 km have been built, and in August this year the government allocated an additional EUR 9.7 million to intensify the construction of the infrastructure.
The information space has been strengthened. During the global shocks, additional funding was allocated to the media to raise public awareness. The broadcasting of the public media content without commercial advertising has been ensured, and the Public Electronic Mass Media Council launched its activities.
The Heads of Government of the Baltic States agreed that the Baltic States will be synchronised with the European energy system a year earlier – in February 2025, thus ensuring Latvia’s energy independence and security.
Improvement of the financial sector
One of the first and most important accomplishments by K. Kariņš in the Prime Minister’s post was the confirmation on that the shortcomings identified in the Moneyval report have been eliminated. Latvia demonstrated its commitment to a stable and transparent financial sector and avoided inclusion on the so-called 'grey list'. It also helped to successfully overcome the economic challenges posed by the COVID-19 pandemic and provide the necessary support to citizens and businesses.
Improving the business environment
The government has approved the outlined directions for capital market development goals in order to facilitate access to finance for economic growth and promote transformation. The informative report outlines further directions of action, also determining the level of equity capitalisation that should be achieved over the next four years.
In order to achieve economic transformation, a number of processes have been launched to improve the business environment. For example, work has begun on the Human Capital Development Strategy and a Human Capital Development Council was established to ensure cooperation between the Ministers of Economy, Welfare, Education and Science at inter-institutional level and jointly decide on the necessary changes in the labour market. This way, it is planned to promote the development of human resources in line with the future labour market demand and the direction of the economy towards higher added value.
The Single Tax Account, which reduces the administrative burden on businesses, was introduced to improve the conditions for entrepreneurship. The administrative burden has also been alleviated by the Economic Activity Revenue Account for micro-enterprise taxpayers.
During the first government headed by Prime Minister Krišjānis Kariņš, a major administrative-territorial reform (ATR) was implemented. As the result of merging and reorganising the previous 119 municipalities, there are now 43 municipalities in Latvia, thus more accessible and high-quality local government services are available to citizens. The work of local governments has also been facilitated by launching the improvement of the planning system – making it more flexible, cutting red-tape and transferring greater responsibility to local governments. In addition, more opportunities for public involvement have been promoted in local governments.
The implementation of the ATR has also been improved in the school network, such as the introduction of a new funding model. According to this model, it is up to local governments to decide which, how much and how busy schools to develop and how to ensure an optimal, competitive remuneration for teachers.
The government has allocated additional EUR 43.5 million to regional and local roads to ensure high-quality roads by connecting the parish centres with the new district centres.
The contribution to rural growth in Latvia has also been significant in the development of the regions. EUR 2 billion were allocated to ensure Latvia’s rural growth, and this year the European Commission has provided EUR 6.8 million in support to Latvian agricultural sectors affected by the fall in milk purchase prices, spring frosts or protracted drought. The reform of the Common Agricultural Policy of the European Union (EU) has also played an important role – more direct and fairer EU and state aid has been achieved in Latvia, from which small and medium-sized farms also benefit.
Promoting the Green deal
During the term of office of the previous government, a deposit system was introduced, thus contributing to the consumption of more sustainable, greener and responsible packaging. The government also adopted a support programme for the use of renewables in households, thus motivating citizens to switch to environmentally friendlier forms of heating and energy supply.
The Modernisation Fund's activities have also been approved, which will support the investment to achieve the climate and energy objectives more rapidly. The funding provided by the Fund will promote the purchase of zero-emission vehicles and the installation of recharging points thereof and the use of renewable energy resources in multi-apartment and public administration buildings. In addition, by ensuring investments, the use of renewable energy sources will be promoted for merchants in energy distribution, transmission and production processes.
During this period, joint venture “Latvijas vēja parki” was established by merging JSC Latvenergo and JSC “Latvia’s State Forests”, with a view to build wind farms by 2030. This will significantly increase the production of greener electricity and contribute to Latvia’s progress towards climate neutrality by reducing emissions of harmful substances, developing the circular economy while strengthening the country’s energy independence and security. Work is also underway on the creation of a joint wind farm of Latvia and Estonia in the Baltic Sea, as well as the procedure for granting a permit for construction of wind parks on lands owned by the State or a local government. This ensures clarity and confidence for project developers.
Sustainable transport infrastructure is being developed in Latvia to achieve the common goals of the European green deal and the railway is strengthened as the backbone of public transport. Train services on Rīga-Liepāja-Rīga route have been restored, and new electric trains will be supplied and railway stations upgraded by the end of 2023.
In order to promote ‘greener’ movement, additional funding has been provided for the construction of cycle paths.
Support for citizens
A wide range of support measures for citizens have also been implemented. The maximum differentiated non-taxable minimum not subject to personal income tax has been increased to EUR 500 per month and the differentiated non-taxable minimum is applied to income of up to EUR 1800 per month. The guaranteed minimum income threshold has been increased, which is now EUR 109 for the first and only person in the household and EUR 76 for each subsequent person in the household.
The minimum monthly salary has been raised from EUR 500 to EUR 620. Disability pensions and state social security benefit have also been increased. The income threshold for a poor and low-income household has been raised to EUR 313 for the first and only person in the household and EUR 219 for each subsequent person in the household. Support for orphans and children left without parental care has also been significantly increased to start an independent life.
The amount of family state benefit for a dependent child from one year to 20 years of age from 2022 depends in turn on the number of children in the family: for one child, the family receives EUR 25 per month, for two children – EUR 50 per child, for three children – EUR 75 per child and for four or more children the allowance amounts to EUR 100 per month for each child.
During this period, the support programme for the purchase of housing for families with children and increased funding for the renovation of multi-apartment residential buildings has been increased. Improvements have been introduced in the rental market by balancing the interests of landlords and tenants and co-financing the allowance paid to tenants of denationalised houses for the release of residential space.
In order to mitigate the negative impact of the rise in energy prices, a number of support measures have been implemented during the previous heating season for the population, especially for groups more exposed to the risk of poverty and/or social exclusion. The number of beneficiaries of housing benefit was expanded and the amount of the benefit increased. The government has approved the first support measures also during this heating season.
Criminal liability for harassment and domestic violence has been increased, thus providing more effective protection for victims of violence or threats of violence. In criminal proceedings in which domestic violence is investigated, the trial of the case will have to be initiated no later than four weeks after the commencement of criminal proceedings. In addition, criminal proceedings for domestic violence will have to be initiated independently of the victim’s application. There will be an opportunity to apply special procedural protection to victims of persecution and violence.
Measures in the health sector
Additional funding of EUR 140 million has been raised for the health sector this year, other measures have also been taken. During this period a plan to strengthen the hospital network has been developed, as well as improvements in the field of human resources of the sector have been developed. It is planned to gradually reach the target salary for each group of medical practitioners according to the value of the position by 2027.
Integrated palliative care service has been introduced. A single oncological register has also been developed and a ‘yellow corridor’ has been introduced for cases of cancer recurrence. The state fully funds breast reconstruction surgeries for women, and the list of reimbursable drugs for oncology patients includes new, innovative drugs.
The procedures for prescribing reimbursable medicinal products have been changed – the active substance is indicated in the prescription of a medicinal product, and pharmacies have an obligation to issue medicinal products that would cost cheaper. Meaningful amendments have also been made to the laws on tobacco circulation and alcohol restriction.
Additional funding has been provided for nurse training, attraction of young specialists in Latvia, improved access to secondary outpatient healthcare and improvement of medical facilities infrastructure, as well as other significant improvements in the health care sector have been made.
Education, science and culture
The transition to a ‘Single School’ has been implemented by successively introducing educational programmes in the official language in pre-schools and primary schools. Additional funding has been provided to educators’ assistants, speech therapists and teachers in the prolonged day groups to assist minority pupils in the process of transition to education in the official language.
The remuneration of teachers has also been increased and workloads have been balanced during this period. According to the schedule for raising remuneration for educators from September 1 of this year, the lowest wage rate for pre-school education teachers has increased to EUR 1240 per rate. Similarly, the monthly wage rate for general primary and secondary education teachers has increased to EUR 1224; it amounts to EUR 1020 for the support staff.
The lowest monthly wage rates have also been increased for heads of general education and interest education institutions, as well as for methodological staff.
Changes to the model for internal governance of universities have also been made during this period, thus contributing to the competitiveness of our higher education and science sector.
The Latvian Maritime Academy, Liepāja Maritime College, Rēzekne Academy of Technologies and Liepaja University have been added to Riga Technical University with a view to strengthen the system of higher education and science. BA School of Business and Finance has in turn been added to the University of Latvia while Latvian Academy of Sport Education to Riga Stradiņš University. A new PhD model has been launched, and a new quality-oriented science-based funding has been introduced.
The conditions for receiving study and student loans have been eased, as well as a new scholarship fund in line with social criteria has been introduced.
Greater investment in science, research and innovation plays a key role in the government-approved informative report on economic transformation.
A value-added tax for the supply of books, periodicals and other media or publications in printed or electronic form, including on-line delivery or downloading, as well as subscription fees has been reduced to 5%.
Despite the challenges posed by the COVID-19 pandemic, the Song and Dance Festival was organised in a very short time. The summer of 2023 marked the 150th anniversary of the festival. The festival was attended by 40560 participants from 23 countries, at least half a million spectators, enjoying 60 different festival events in 20 venues.
An international sketch project competition for Riga Philharmonic architecture has been announced. Six sketches have been nominated for the second round of the competition.
Measures taken or launched in different sectors have contributed to digital development. Confirming the priority axes for economic transformation, the government agreed on promoting digital skills in society as a whole and using digital solutions to reduce the administrative burden on businesses. A strategy for the digitalisation of health processes has also been developed.
The introduction of the Legal Acts' Portal has also contributed to the digitalisation of public administration processes. All legal acts under consideration by the government have been developed, harmonised and adopted through a single co-working environment for already two years. The public environment of the portal is accessible to general public, and everyone can follow the progress and participate in the development of legal acts.
The establishment of the Digital Agency was launched. The task of the Digital Agency will be to support institutions in the efficient digital transformation process and to ensure the availability of convenient public services for the public.
The overarching objective of the Agency will be to create a convenient digital interaction between citizens and the state, as well as to provide a wide network of support services for citizens with insufficient digital skills.
Smaller and more efficient public administration
Part of the support functions of public administration institutions has been centralised and the number of employees has been reduced by 7.64 % in line with the objectives of the 2020 Public Administration Reform Plan.
Reform of the Employee Remuneration System was approved and is being gradually implemented, and many processes have been modernised and digitalised. The initiated change processes are further developed and expended by implementing the Plan for Modernisation of Public Administration 2023-2027.
The State Chancellery has taken over the Cross-Sectoral Coordination Centre with a view to strengthen the centre of government and focus on long-term development, public administration development and cross-sectoral coordination functions in a single team. The analytical capacity of the government centre is thereby strengthened to support the Prime Minister and the Cabinet of Ministers in action policy making.
Challenges posed by the COVID-19 pandemic
Latvia, just like the rest of the world, also faced challenges posed by the COVID-19 pandemic. The government provided the whole of society of Latvia with COVID-19 vaccines to reduce the spread of the virus. Other safety measures were also implemented to reduce the increase in morbidity, while the government provided support measures for employers, workers and general population.
Support to Ukraine and Ukrainians
As Russia launched the brutal war against Ukraine, Latvia was one of the most active countries since the very beginning of the war that condemned and still condemns Russia’s aggression against Ukraine and advocates a strong international response to Putin’s regime.
Latvia has provided all types of coordinated political, military, financial and humanitarian support to Ukraine. The provision and continuity of the necessary social support to the civilian population in Ukraine has been ensured. The Ukrainian soldiers who have fought for Ukraine’s freedom receive health care services also in Latvia.
Latvia also provides assistance to the Ukrainian public media by handing over equipment that helps to carry out work also under war conditions with frequent power supply interruptions.
During this period, Latvia also handed over to Ukraine a total of 195 vehicles confiscated from drunk drivers and supported Ukraine with the transfer of medical equipment, medicines and other resources necessary for rescue services.
For more detailed information, please see this timeline on the most significant work accomplished by the governments headed by Krišjānis Kariņš.