This Decision is addressed to the Republic of Latvia.

4.The release of instalments in accordance with the Financing Agreement shall be conditional on available funding and a decision by the Commission, taken in accordance with Article 24 of Regulation (EU) 2021/241, that Latvia has satisfactorily fulfilled the relevant milestones and targets identified in relation to the implementation of the recovery and resilience plan. Subject to the entry into force of the legal commitments referred to in paragraph 1, to be eligible for payment, milestones and targets shall be completed no later than 31 August 2026.

3.The pre-financing shall be released subject to the entry into force and in accordance with the Financing Agreement provided for in Article 23(1) of Regulation (EU) 2021/241. Pre-financing shall be cleared by being proportionally deducted against the payment of the instalments.

2.The Union financial contribution shall be made available by the Commission to Latvia in instalments in accordance with the Annex. An amount of EUR 237 380 000 shall be made available as a pre-financing payment, equal to 13 % of the financial contribution. The pre-financing and instalments may be disbursed by the Commission in one or several tranches. The size of the tranches shall be subject to the availability of funding.

1.The Union shall make available to Latvia a financial contribution in the form of non-repayable support amounting to EUR 1 826 000 000. An amount of EUR 1 640 779 642 shall be available to be legally committed by 31 December 2022. Subject to the update provided for in Article 11(2) of Regulation (EU) 2021/241 calculating an amount for Latvia equal to or more than this amount, a further amount of EUR 185 220 358 shall be available to be legally committed from 1 January 2023 until 31 December 2023.

The assessment of the recovery and resilience plan of Latvia on the basis of the criteria provided for by Article 19(3) of Regulation (EU) 2021/241 is approved. The reforms and investment projects under the recovery and resilience plan, the arrangements and timetable for monitoring and implementation of the recovery and resilience plan, including the relevant milestones and targets, the relevant indicators relating to the fulfilment of the envisaged milestones and targets, and the arrangements for providing full access by the Commission to the underlying relevant data are set out in the Annex to this Decision.

Article 1 Approval of the assessment of the recovery and resilience plan

(48)This Decision should be without prejudice to the outcome of any procedures relating to the award of Union funds under any other Union programme than Regulation (EU) 2021/241 or to procedures relating to distortions of the operation of the internal market that may be undertaken, in particular under Articles 107 and 108 of the Treaty. It does not override the requirement for Member States to notify instances of potential State aid to the Commission under Article 108 of the Treaty,

(47)Latvia has requested pre-financing of 13 % of the financial contribution. That amount should be made available to Latvia subject to the entry into force and in accordance with the Financing Agreement provided for in Article 23(1) of Regulation (EU) 2021/241.

(46)The support to be provided is to be financed from the borrowing by the Commission on behalf of the Union on the basis of Article 5 of Council Decision (EU, Euratom) 2020/2053. The support should be paid in instalments once Latvia has satisfactorily fulfilled the relevant milestones and targets identified in relation to the implementation of the recovery and resilience plan.

(45)In accordance with Article 11(2) of Regulation (EU) 2021/241, the calculation of the maximum financial contribution for Latvia is to be updated by 30 June 2022. As such, in accordance with Article 23(1) of that Regulation, an amount for Latvia should be made available now for a legal commitment by 31 December 2022. Where necessary following the updated maximum financial contribution, the Council, on a proposal from the Commission, should amend this Decision to include the updated maximum financial contribution without undue delay.

(44)The estimated total cost of the recovery and resilience plan of Latvia is EUR 1 826 000 000. As the recovery and resilience plan satisfactorily complies with the criteria for assessment set out in Regulation (EU) 2021/241 and, furthermore, as the amount of the estimated total costs of the recovery and resilience plan is lower than the maximum financial contribution available for Latvia, the financial contribution allocated for Latvia’s recovery and resilience plan should be equal to the amount of the estimated total costs of the recovery and resilience plan without prejudice to an update of the plan taking into account the maximum financial contribution in accordance with Article 18(2) of that Regulation.

(43)Following the positive assessment of the Commission concerning Latvia’s recovery and resilience plan with the finding that the plan satisfactorily complies with the criteria for assessment set out in Regulation (EU) 2021/241, in accordance with Article 20(2) and Annex V to that Regulation, this Decision should set out the reforms and investment projects necessary for the implementation of the plan, the relevant milestones, targets and indicators, and the amount made available from the Union for the implementation of the plan in the form of non-repayable financial support.

(42)Stakeholders’ engagement in the implementation is planned to be established through the management and control system used for the implementation of the Cohesion policy support, where stakeholders’ representatives form an integral part of the EU funds Monitoring Committee. To ensure ownership by the relevant actors, it is crucial to involve all local authorities and stakeholders concerned, including social partners, throughout the implementation of the investments and reforms included in the plan.

(41)A series of thematic public consultations open to civil society organisations, social partners, local authorities and other stakeholders were organised between December 2020 and March 2021. Representatives from social partners, business organisations, local governments and other stakeholders took part in the discussion on the plan between the Commission and the Latvian authorities. Partners’ suggestions for the plan are publicly available and have been published along with the plan.

(40)The plan is contributing to various multi country projects (MCPs) and planned Important Projects of Common European interest (IPCEIs): Via Baltica 5G - corridor, European Network of Digital Innovation Hubs, European Common Data Infrastructure and Service (through the set-up of a potential IPCEI on Next Generation Cloud), Connected Public Administration, Genome Europe, Baltic States’ X-ray image exchange system (Baxe), and Microprocessors and semiconductors technologies. These projects are funded by other programmes as well, such as Digital Europe Program or Connecting Europe Facility, and by structural funds.

(39)The plan includes a general security self-assessment for each component and lists the measures that have a security dimension. While the Latvian security self-assessment is general, the plan addresses cybersecurity and other digital security aspects. The self-assessment concludes that with the envisaged investments the security of the measures concerned would be strengthened.

(38)With regard to gender equality and equal opportunities for all, the plan describes challenges in terms of gender equality and needs of persons with disabilities. The plan also explains which investments are expected to contribute to overcoming the challenges identified. The Latvian recovery and resilience plan foresees the implementation of various measures to promote gender equality and equal opportunities. To address the specific needs of persons with disabilities, the plan includes a measure to ensure accessibility of public and private buildings. In addition, all new public transport vehicles should be equipped with easy access for persons with reduced mobility. The situation of vulnerable groups is generally addressed, notably in the area of health. The plan also includes measures to improve educational opportunities for all school children. As regards gender equality, the plan includes measures aiming specifically at female engagement in information and communication technology career opportunities, with a view to increase the gender balance of information and communication technology specialists. The labour market situation for female jobseekers is expected to be improved by targeted measures aiming at the promotion of reconciliation of work and family life through the creation of remote and part-time work opportunities for households with children. The management and implementation of projects should ensure equal pay for work of equal value as well as diversity in management. In addition, the selection process of projects should be subject to the principle of non-exclusion and the obligation to combat any discrimination based not only on sex, but also on grounds of race or ethnic origin, religion or belief, disability, age, and sexual orientation.

(37)The Latvian recovery and resilience plan is coherent, with consistent, mutually reinforcing reforms and investments, and synergies between the different components. The recovery and resilience plan contains measures for the implementation of reforms and public investment projects that represent coherent actions. The six components structure the investments and reforms and show their thematic relation and interlinkages well. Coherence is ensured within the components, with investments accompanying relevant reforms, as well as between the different components in the plan. The components included in the plan form a single framework for reforms and investments, the core task of which is to promote productivity, reduce inequalities, as well as promote the green transition and digital transformation. The six components are mutually reinforcing and coherent in their aims.

(36)In accordance with Article 19(3), point (k) and section 2.11 of Annex V to Regulation (EU) 2021/241, the plan includes to a high extent (Rating A) measures for the implementation of reforms and public investment projects that represent coherent actions.

(35)Latvia has indicated that existing IT-tools might require amendment or new development, such as the RRF module in the Cohesion Policy Funds Management Information System (KPVIS), and the use of transitional IT tools to meet specific management and reporting requirements described in the plan. In accordance with Article 20(5), point (e) of Regulation (EU) 2021/241, Latvia should implement this amendment of the existing IT-tools in order to comply with Article 22 of that Regulation, by confirming the status of its implementation with the first payment request. Where such payment request is not fully based on the functionalities of the amended IT-tools as described in the plan, a dedicated audit report on the system should be undertaken. The report should analyse any related weaknesses found and corrective actions taken or planned.

(34)The overall arrangements have been agreed by the Latvian Cabinet of Ministers on 18 August 2020. The adoption of further implementing acts is expected before the implementation of the plan has started. This did not hinder the assessment of the described process and structures. The Latvian authorities should provide an update on the adoption of those acts and relevant obligations should be set out in the Financing Agreement to be concluded in accordance with Article 23(1) of Regulation (EU) 2021/241.

(33)The control system and arrangements proposed in the recovery and resilience plan are based on robust processes and structures used in the existing national framework for the implementation of structural funds. The plan clearly identifies actors (bodies/entities) and their roles and responsibilities for the performance of the internal control tasks. The relevant functions are appropriately segregated. The control system and other relevant arrangements, including for the collection and making available of data on final recipients, are adequate.

(32)In accordance with Article 19(3), point (j) and section 2.10 of Annex V to Regulation (EU) 2021/241, the arrangements proposed in the recovery and resilience plan are adequate (Rating A) to prevent, detect and correct corruption, fraud and conflicts of interests when using the funds provided under that Regulation, and the arrangements are expected to effectively avoid double funding under that Regulation and other Union programmes. This is without prejudice to the application of other instruments and tools to promote and enforce compliance with EU law, including for preventing, detecting and correcting corruption, fraud and conflicts of interests, and for protecting the Union finances in line with Regulation (EU, Euratom) 2020/2092 of the European Parliament and of the Council.

(31)Latvia has provided individual cost estimates for all investments included in the recovery and resilience plan. The cost breakdown is generally detailed and well-substantiated. The estimates are based on comparisons with past investments of similar nature and on market and price analysis. The assessment of the cost estimates and inherent supporting documents show that most of the costs are well justified and reasonable. The amounts proposed for financing were deemed appropriate and seen as establishing the plausibility of the cost estimates to a medium extent. Although the costs of most measures are deemed highly plausible (meaning the estimated cost is in the low to medium range compared to costs of similar reforms or investments), there are a limited set of measures for which the costing is deemed to be plausible to a low extent. Finally, the estimated total costs of the recovery and resilience plan are in line with the principle of cost-efficiency and commensurate to the expected national economic and social impact.

(30)In accordance with Article 19(3), point (i) and section 2.9 of Annex V to Regulation (EU) 2021/241, the justification provided in the plan on the amount of the estimated total costs of the recovery and resilience plan is to a medium extent (Rating B) reasonable and plausible, is in line with the principle of cost efficiency and is commensurate to the expected national economic and social impact.

(29)Member States should ensure that financial support under the Facility is communicated and acknowledged in line with article 34 of Regulation (EU) 2021/241. Technical support may be requested under the Technical Support Instrument to assist Member States in the implementation of their plan.

(28)The Latvian recovery and resilience plan presents an administrative organisation for its implementation process in Latvia which should be ensured in the context of the existing national framework for the implementation of shared management funds. The plan provides an overview of the monitoring and reporting processes envisaged and clearly identifies actors and their roles and responsibilities for the performance of the internal control tasks. The Ministry of Finance will be tasked with coordinating the implementation of the plan, whereas the State Chancellery, line Ministries and the Central Finance and Contracting Agency should be tasked with ensuring and monitoring the implementation. The milestones and targets are realistic and the proposed indicators are relevant and robust. The measures in the plan are to some extent fragmented, which results in a high number of milestones and targets. They tend to be back loaded towards 2026, especially in the cases of infrastructure investment and horizontal schemes for business investment.

(27)In accordance with Article 19(3), point (h) and section 2.8 of Annex V to Regulation (EU) 2021/241, the arrangements proposed in the recovery and resilience plan are adequate (Rating A) to ensure effective monitoring and implementation of the recovery and resilience plan, including the envisaged timetable, milestones and targets, and the related indicators.

(26)The implementation of envisaged reforms and investments is expected to bring structural improvements in the economy. The reform of the governance of the higher education institutions in particular should have a long-lasting impact on the quality of education and research in Latvia. Other measures include reforms aiming at fostering digitalisation and the support of digital skills, the reorganisation of municipalities, reform of the tax administration to reduce the shadow economy, and the centralisation and professionalisation strategy with regard to procurement. Structural improvements are also to be expected from the implementation of investments aiming at ensuring higher energy efficiency of buildings through renovation, investments in digitalisation, in support of the administrative territorial reform, in the health infrastructure of university and regional hospitals, in infrastructure for secondary outpatient service providers, and in infrastructure for industrial parks. Lasting impact of the plan can also be enhanced through synergies between the plan and other programmes including those financed by the cohesion policy funds, notably by addressing in a substantive manner the deeply rooted territorial challenges and promoting a balanced development.

(25)In accordance with Article 19(3), point (g) and section 2.7 of Annex V to Regulation (EU) 2021/241, the recovery and resilience plan is expected to have a lasting impact on Latvia to a large extent (Rating A).

(24)The digital measures included in the plan cover various aspects of the digital transformation encompassing public and private sector, skills and connectivity – with a focus on improving the competitiveness of the Latvian economy in the medium and long term. Poor basic digital skills, low uptake of digital solutions by businesses as well as a shortage of information and communication technology specialists are Latvia’s key digital challenges, impacting on workforce availability, competitiveness, resilience, use of government e-services and innovation alike. In response, Latvia’s plan includes sizeable investments in basic and advanced digital skills. Latvia’s plan also includes measures for the digital modernisation of public administration and the digital transformation of public services, including centralised public solutions. The plan addresses the challenges related to the digital transition also by supporting the digital transformation of businesses and creating a better environment for research and innovation with measures to improve the digitisation of small and medium sized enterprises as well as by creating the necessary framework for Latvia’s participation in the network of European Digital Innovation Hubs. The plan includes measures to deploy very high-speed broadband that should help further improve the digital infrastructure.

(23)In accordance with Article 19(3), point (f) and section 2.6 of Annex V to Regulation (EU) 2021/241, the recovery and resilience plan contains measures that contribute to a large extent (Rating A) to the digital transition or to addressing the challenges resulting from it. The measures supporting digital objectives account for an amount which represents 21 % of the plan’s total allocation calculated in accordance with the methodology of Annex VI to Regulation (EU) 2021/241.

(22)Latvia’s recovery and resilience plan focuses particularly on sustainable mobility. The overhaul of the Riga Metropolitan area and the associated investment programme in greening urban public transport and infrastructure should contribute strongly to decarbonising the Latvian transport sector. The recovery and resilience plan also includes measures with a focus on the improvement of energy efficiency in multi-apartment and public buildings and businesses and the upgrade of the electricity grid. This should contribute to improving energy efficiency and reducing greenhouse gas emissions in the building sector. The recovery and resilience plan also focuses on climate change adaptation thanks to investment in flood prevention and fire prevention which should directly contribute to the objective of adapting to the consequences of climate change. The plan contains no measures having biodiversity as their objective. However, some of the measures for climate mitigation may also be beneficial to the preservation of biodiversity, as climate change is one of the main threats to biodiversity.

(21)In accordance with Article 19(3), point (e) and section 2.5 of Annex V to Regulation (EU) 2021/241, the recovery and resilience plan contains measures that contribute to a large extent (Rating A) to the green transition, including biodiversity, or to addressing the challenges resulting therefrom. The measures supporting climate objectives account for an amount which represents 37,6 % of the plan’s total allocation calculated in accordance with the methodology of Annex VI to Regulation (EU) 2021/241. In accordance with Article 17 Regulation (EU) 2021/241, the recovery and resilience plan is consistent with the information included in the National Energy and Climate Plan 2021-2030.

(20)The assessment regarding the compliance with the principle of ‘do no significant harm’ provided by Latvia in its recovery and resilience plan has been carried out in accordance with the ‘do no significant harm’ technical guidance of the European Commission (2021/C 58/01). It covers the six environmental objectives within the meaning of Article 17 of Regulation (EU) 2020/852, namely climate change mitigation, climate change adaptation, sustainable use and protection of water and marine resources, circular economy, pollution prevention and control, and protection and restoration of biodiversity and ecosystems. The environmental impact is assessed at measure-level that is one individual assessment per reform or investment. Where needed, Latvia has proposed the implementation of mitigating measures to avoid significant harm. This is particularly the case for flood protection measures, where the compliance with the principle of ‘do no significant harm’ has been ensured by including a specific milestone. Accordingly, investments in flood protection have to ensure strict compliance with Union environmental law and ensure the absence of harm to the status of water bodies. The renovation of roads is accompanied by an investment in decarbonised transport to prevent harm to the objective of climate change mitigation.

(19)In accordance with Article 19(3), point (d) and section 2.4 of Annex V to Regulation (EU) 2021/241, the recovery and resilience plan is expected to ensure that no measure (Rating A) for the implementation of reforms and investments projects included in the recovery and resilience plan does significant harm to environmental objectives within the meaning of Article 17 of Regulation (EU) 2020/852 of the European Parliament and of the Council (the principle of ‘do no significant harm’).

(18)Investments and reforms with the view to improving social inclusion and healthcare are expected to strengthen social cohesion and social protection. The introduction of indexation of minimum income benefits should ensure that the benefits are annually adjusted to the wage growth, contributing to their adequacy. Combined with the increase of the minimum income threshold of not less than 20 % of the median income, these measures are expected to reduce income inequality and improve the effectiveness of social transfers that have been identified among Latvia’s most important social challenges. Furthermore, investments in the health infrastructure combined with a reform aimed at attracting additional human resources to the health sector are expected to improve the accessibility of healthcare, the lack of which has predominantly affected the low-income earners and people living in peripheral areas.

(17)Investments and reforms in green and digital infrastructure, regional development, research and innovation as well as extensive support schemes for business investment will bolster Latvia’s growth potential over the medium to long term. Investments and accompanying reforms to the Riga transport system will boost the city’s competitiveness and ability to attract investments and talent. Measures to foster private investments in wind energy will contribute to reaching renewable energy targets and becoming a competitive low-carbon economy. Business investment support schemes will accelerate Latvia’s pursuit of higher export capacity and productivity growth, building on the fundamentals of industry, namely innovation, competition and a strong and well-functioning single market. Latvia’s plan foresees investments and reforms aimed at boosting the population’s skills. Investments in housing and infrastructure for peripheral regions will strengthen Latvia’s lagging regions’ growth opportunities. Altogether, these measures address long-standing challenges of Latvia’s economy – low innovation spending, a low uptake of modern technologies as well as significant regional disparities.

(16)Simulations by the Commission show that the plan has the potential to increase the GDP of Latvia by 2 % by year 2026. Latvia’s Stability Programme for 2021 points to a clear additionality effect of the plan as the public investment level is expected to be significantly above the pre-pandemic level that is 5,9 % of GDP on average over 2021 to 2024 compared with 5,1 % of GDP on average over 2017-2019.

(15)In accordance with Article 19(3), point (c) and section 2.3 of Annex V to Regulation (EU) 2021/241, the recovery and resilience plan is expected to have a high impact (Rating A) on strengthening the growth potential, job creation, and economic, social and institutional resilience of the Member State, contributing to the implementation of the European Pillar of Social Rights, including through the promotion of policies for children and youth, and on mitigating the economic and social impact of the COVID-19 crisis, thereby enhancing the economic, social and territorial cohesion and convergence within the Union.

(14)The plan significantly reinforces the investments in research and innovation and supports various public administration reforms. It also alleviates the socio-economic costs of the green and digital transitions, while taking into account regional disparities. The plan aims to make a significant change in the fragmented innovation system governance and create sustainable innovation ecosystems, thereby fostering higher overall investment. Significant investments are foreseen in the green and digital transitions, including investments in energy efficiency, electricity grid modernisation, public sector IT systems, basic and advanced digital skills, both in the public and private sector. Measures improving intermodal transport infrastructure within and around Riga aim to facilitate labour mobility and help curb growing energy consumption and greenhouse gas emissions from passenger cars. To tackle regional disparities, the plan builds on the administrative territorial reform and includes significant investments in industrial parks, municipal transport, road renovation, schools and affordable housing. Public administration accountability and efficiency should be strengthened through reforms and investments to fight the shadow economy and economic crime, improve the procurement system and innovation in the public sector. The plan is expected to continue work on the implementation of the anti-money laundering strategy by reforming the cooperation, information exchange and training systems between law enforcement agencies involved in the identification, investigation and trial of economic crimes, while strengthening their technical capacity.

(13)Continued convergence remains Latvia’s key challenge in terms of improving its population’s living standards. The reforms and investments in skills, education and training, healthcare and social inclusion should contribute to improving Latvia’s productivity and long-term inclusive growth. Significant investments are envisaged for upskilling and reskilling measures aimed to equip the workforce with the required skills and new affordable housing to improve regional labour mobility. Reforms and investments to enhance the resilience and accessibility of the health system, support the provision of integrated care services and raise the capacity of health institutions to adapt to crisis situations are included in the plan. The plan contributes to addressing the social challenges by further improving the minimum income support system, through an annual indexation mechanism and linking it to the development of the median income. Other investments in the accessibility and rehabilitation infrastructure for persons with reduced mobility and disabilities, as well as long-term care investments for elderly should also contribute to achieving progress in addressing current challenges.

(12)The plan includes an extensive set of mutually reinforcing reforms and investments that contribute to effectively addressing all or a significant subset of the economic and social challenges outlined in the country-specific recommendations addressed to Latvia by the Council in the European Semester in 2019 and in 2020, notably those in the areas of healthcare, such as the resilience, accessibility, quality and cost-effectiveness of the healthcare sector; education and skills, such as the quality and efficiency of the education system and digital skills; social inclusion, such as the minimum income benefits; research and innovation; investments, such as green and digital transition, affordable housing; public administration and business climate.

(11)The recommendations related to the immediate fiscal policy response to the pandemic can be considered as falling outside the scope of Latvia’s plan, notwithstanding the fact that Latvia has generally responded adequately and sufficiently to the immediate need to support the economy through fiscal means in 2020 and 2021, in line with the provisions of the General Escape Clause. Moreover, the recommendation to achieve the medium-term budgetary objective in 2020 is no longer relevant, due both to the lapsing of the corresponding budgetary period and the activation in March 2020 of the General Escape Clause of the Stability and Growth Pact in the context of the pandemic.

(10)In accordance with Article 19(3), point (b) and section 2.2 of Annex V to Regulation (EU) 2021/241, the recovery and resilience plan is expected to contribute to effectively addressing all or a significant subset of challenges (Rating A) identified in the relevant country-specific recommendations, including fiscal aspects thereof addressed to the Member State concerned or challenges identified in other relevant documents officially adopted by the Commission in the context of the European Semester.

Addressing all or a significant subset of challenges identified in Country Specific Recommendations

(9)The plan focuses on Latvia’s main challenges that are the green and digital transitions, social exclusion, healthcare, regional disparities, digital skills and adult learning, and higher education, convergence and productivity growth, including research and innovation and support for business investments, and administrative capacity, including tax administration, public procurement and the judicial system.

(8)The plan includes a balanced set of reforms and investments aimed at addressing country’s key challenges, stimulating recovery from Covid-19 crisis and laying foundation for its long-term growth. The plan includes 85 measures addressing Latvia’s main challenges and the policy areas of European relevance, thus covering all six pillars. The plan includes six components: green transition, digital transition, inequality reduction, health, productivity, and rule of law. The components’ objectives are complementary and the reforms leverage the impact of associated investments, notably by bringing structural change and increasing the participation and financing from the private sector.

(7)In accordance with Article 19(3), point (a) and section 2.1 of Annex V to Regulation (EU) 2021/241, the recovery and resilience plan represents to a large extent (Rating A) a comprehensive and adequately balanced response to the economic and social situation, thereby contributing appropriately to all six pillars referred to in Article 3 of Regulation (EU) 2021/241, taking the specific challenges and the financial allocation of the Member State concerned into account.

(6)The implementation of the Member States’ recovery and resilience plans will constitute a coordinated effort of investment and reforms across the Union. Through the coordinated and simultaneous implementation of these reforms and investments and the implementation of cross-border projects, these reforms and investments will mutually reinforce each other and generate positive spillovers across the whole Union. Therefore, about one third of the impact of the Facility on Member States’ growth and job creation will come from spillovers from other Member States.

(5)The recovery and resilience plans should pursue the general objectives of the Recovery and Resilience Facility established by Regulation (EU) 2021/241 and of the EU Recovery Instrument set up by Council Regulation (EU) 2020/2094 in order to support the recovery in the aftermath of the COVID-19 crisis. They should promote the Union´s economic, social and territorial cohesion by contributing to the six pillars referred to in Article 3 of Regulation (EU) 2021/241.

(4)On 30 April 2021, Latvia submitted its national recovery and resilience plan to the Commission, in accordance with Article 18(1) of Regulation (EU) 2021/241. The national ownership of the recovery and resilience plans is underpinning their successful implementation and lasting impact at national level and credibility at European level. Pursuant to Article 19 of that Regulation, the Commission has assessed the relevance, effectiveness, efficiency and coherence of recovery and resilience plan, in accordance with the assessment guidelines of Annex V to that Regulation.

(3)[The Council recommendation on the economic policy of the euro area recommended to euro area Member States to take action, including through their recovery and resilience plans, to, inter alia, ensure a policy stance which supports the recovery and to further improve convergence, resilience and sustainable and inclusive growth. The Council recommendation also recommended to strengthen national institutional frameworks, to ensure macro-financial stability and to complete EMU and strengthen the international role of the euro.] [If the Council recommendation is not adopted by the time of the CID adoption, please remove the recital].

(2)On 9 July 2019 and on 20 July 2020, the Council addressed recommendations to Latvia in the context of the European Semester. In particular, the Council recommended to reduce taxation for low-income earners by shifting it to other sources, particularly capital and property, and by improving tax compliance and to continue progress on the anti-money laundering framework. It also recommended to strengthen the social safety net and address social exclusion notably by improving the adequacy of minimum income benefits, minimum old-age pensions and income support for people with disabilities, to increase the quality and efficiency of education and training, in particular of low-skilled workers and jobseekers, including by strengthening the participation in vocational education and training and adult learning, and to strengthen the resilience, accessibility, quality and cost-effectiveness of the health system including by providing additional human and financial resources. It recommended to focus investment on the green and digital transition, in particular on research and innovation, clean and efficient production and use of energy, sustainable transport and digital infrastructures. With regard to combating the impact of the crisis, it recommended to provide adequate income support to the groups most affected by the crisis and to mitigate its employment impact, including through flexible working arrangements, active labour market measures and skills. Finally, it recommended to strengthen the accountability and efficiency of the public sector, in particular with regard to local authorities and state-owned and municipal enterprises and improving the conflict of interest regime. Having assessed progress in the implementation of those country-specific recommendations at the time of submission of the recovery and resilience plan, the Commission finds that substantial progress has been achieved with respect to the recommendations on fiscal policy, anti-money laundering, income support and on liquidity support to combat the impact of the crisis.

(1)The COVID-19 outbreak has had a disruptive impact on the economy of Latvia. In 2019, the gross domestic product per capita (GDP per capita) of Latvia was 51,0 % of the EU average. According to the Commission’s Spring 2021 forecast, the real GDP of Latvia declined by 3,6 % in 2020 and is expected to decline by 0,3 % cumulatively in 2020 and 2021. Longer-standing aspects with an impact on medium-term economic performance include in particular the tax compliance, skills shortages, poor health outcomes and weak innovation performance.

Having regard to the proposal from the European Commission,

Having regard to Regulation (EU) 2021/241 of the European Parliament and of the Council of 12 February 2021 establishing the Recovery and Resilience Facility and in particular Article 20 thereof,

Having regard to the Treaty on the Functioning of the European Union,

on the approval of the assessment of the recovery and resilience plan for Latvia

on the approval of the assessment of the recovery and resilience plan for Latvia

EUROPEAN COMMISSION Brussels, 22.6.2021 COM(2021) 340 final ANNEX

to the Proposal for a Council Implementing Decision on the approval of the assessment of the recovery and resilience plan for Latvia {SWD(2021) 162 final}



ANNEX SECTION 1: REFORMS AND INVESTMENTS UNDER THE RECOVERY AND RESILIENCE PLAN 1.Description of Reforms and Investments A. COMPONENT 1: CLIMATE CHANGE AND ENVIRONMENTAL SUSTAINABILITY The general objective of this component of the Latvian recovery and resilience plan is to contribute to the green transition and notably contribute to the environmental objectives of climate change mitigation and climate adaptation. Each sub-component focuses on some of the challenges of the green transition. Subcomponent 1.1 focuses on sustainable mobility with a view to decrease emissions in the transport sector, especially in Riga and its periphery by investing in clean public transport (notably railway) infrastructure. Subcomponent 1.2 mainly targets increasing energy efficiency by supporting various energy renovation programmes in public and private buildings and supporting sustainable energy networks. Lastly, subcomponent 1.3 contributes to climate adaptation by preventing climate change related risks such as fires and floods. The component supports addressing the Country-Specific Recommendations on transport notably on its sustainability, energy efficiency and energy interconnections (Country Specific Recommendation 3, 2019). It also contributes to front-loading mature public investment projects and focusing on the green and digital transition, in particular clean and efficient production and use of energy, sustainable transport infrastructure (Country Specific Recommendation 3, 2020). It is expected that no measure in this component does significant harm to environmental objectives within the meaning of Article 17 of Regulation (EU) 2020/852, taking into account the description of the measures and the mitigating steps set out in the recovery and resilience plan in accordance with the DNSH Technical Guidance (2021/C58/01). A.1. Description of the reforms and investments for non-repayable financial support Reform: 1.1.1 Greening the Riga Metropolitan Transport System The general objective of the measure is to contribute to reduce Latvia’s greenhouse gas (GHG) emissions with a focus on transport which represents the biggest source of GHG emissions (28,5 % share of total GHG emissions (excluding land use, land-use change and forestry) in 2018 and 36,7 % of non-ETS GHG emissions). This measure specifically focuses on the Riga metropolitan area which covers about 65% of the Latvian population. A specific objective is to consolidate and rationalise the currently fragmented transport system to incentivise the use of public transportation. The measure consists in a general overhaul of the Riga Metropolitan Transport System. A multimodal public transport network with a single and coherent timetable, a single price and discount policy and a single ticket system shall be created. The measure shall also include a substantial investment programme in clean mobility and infrastructure with a focus on railway solutions (electrification of 81 km of railway) and zero-emission public transport (acquisition of four low-floor trams, 17 electric buses and seven electric bus charging stations, construction of cycle lanes). This shall be completed by the construction of environmentally-friendly mobility nodes (six regional and two local mobility points), of an independent high-speed transport line devoted to public transport and the extension of the tram line by 3.5 km, to support multimodal transport use. The measure shall be implemented by 31 August 2026. Investment: 1.2.1.1.i.I. Improving the energy efficiency of multi-apartment buildings and transition to renewable energy technologies The general objective of this measure is to improve the energy efficiency of buildings. As energy consumed in the buildings sector accounts for up to 40 % of the final energy consumption, the measure is expected to reduce the impact on the environment and contribute to climate change mitigation. Another aim is to reduce energy bills for inhabitants and increase the level of security of energy supply. Other specific objectives include reducing the level of energy poverty and supporting employment. This measure specifically focuses on multi-apartment buildings. The measure consists of a support programme for energy renovation in multi-apartment buildings. It shall take the form of a financial instrument (loan) with a capital discount of up to 49 % of the amount of the loan. Aid shall only be available for buildings where the project is expected to achieve at least 30 % energy savings.

The measure shall be implemented from 1 September 2021 until 31 August 2026. Investment: 1.2.1.2.i. Increasing energy efficiency in business, in the form of a combined financial instrument The general objective of this measure is to improve the energy efficiency of Latvian businesses. Investments in the energy efficiency of businesses aim to promote a rationalised use of energy resources, reduce negative impacts on the environment and climate, as well as improve the productivity, competitiveness and export capacity of enterprises. This measure specifically focuses on businesses. The first pillar of the measure consists in a support programme in the form of a combined financial instrument (loan with a grant in the form of a capital discount). The investment programme shall finance investments by enterprises in improving energy efficiency, introducing renewable energy technologies and related research and development activities, carrying out energy audits, as well as investing in sustainable transport and introducing new energy-efficient technologies in production. A second pillar of the measure shall consist in grants for the development (through industrial research, experimental development, feasibility studies) of new products and technologies related to the low carbon economy, climate resilience and adaptation. The measure shall be implemented from 1 January 2022 until 31 August 2026. In order to ensure that the measure complies with the ‘Do no significant harm’ Technical Guidance (2021/C58/01), the eligibility criteria contained in terms of reference for upcoming calls for projects shall exclude the following list of activities: (i) activities related to fossil fuels, including downstream use ; (ii) activities under the EU Emission Trading System (ETS) achieving projected greenhouse gas emissions that are not lower than the relevant benchmarks ; (iii) activities related to waste landfills, incinerators and mechanical biological treatment plants ; and (iv) activities where the long-term disposal of waste may cause harm to the environment. The terms of reference shall additionally require that only activities that comply with relevant EU and national environmental legislation may be selected. Investment: 1.2.1.3.i.I. Improving municipal buildings and infrastructure by promoting the transition to renewable energy technologies and improving energy efficiency The general objective of this measure it to improve the energy efficiency of Latvian municipal buildings. A large part of existing municipal buildings had been built before thermal requirements for building were increased and therefore have a low energy performance. More specifically, the objective of the measure is to improve the energy efficiency of local government buildings and infrastructure in order to reduce annual primary energy consumption and reduce GHG emissions. As a complementary objective, this measure is also expected to reduce the cost of maintenance of municipal buildings. The measure consists of investments in energy efficiency renovation in buildings owned by local government (and mixed properties where the municipalities are majority shareholders), including buildings dedicated to social housing, health care, education and social services. The measure shall be implemented from 1 January 2022 until 31 December 2025. Investment: 1.2.1.4.i.I. Improving the energy efficiency of public sector buildings, including historical buildings The general objective of this measure is to improve the energy efficiency of the Latvian public building stock. It applies to buildings owned by the central government including historical and judicial ones. The measure seeks to improve their energy efficiency, promote the transition to renewable energy in energy production, and achieve GHG emission reductions. The measure consists of investment in energy efficiency improvements for public buildings. The aid shall ensure that the implementation of all projects shall, on average, result in at least 30 % energy savings under the programme. The measure shall be implemented from 1 January 2022 until 31 August 2026. Investment: 1.2.1.5.i. Modernisation of electricity transmission and distribution networks The general objective of this measure is to contribute to reaching climate neutrality objectives by creating a sustainable grid infrastructure in which green technologies notably wind may be more easily deployed. Investments in the green transformation of electricity grids and digital infrastructure are necessary to provide adequate electricity supply infrastructure for electro-mobility, and sustainable and efficient system operation. The measure is also expected to contribute to the synchronisation of the Baltic electricity systems with continental European networks and the objectives and activities of the Baltic Electricity Market Integration Plan. The measure consists of direct investment in upgrading the electricity grid, developing IT solutions to increase the flexibility and security of the transmission system and distribution system and creating among others a national electricity market data exchange and storage platform and an automated smart metering system. The measure shall also improve the regulatory framework and the enabling conditions to facilitate the deployment of onshore wind energy on state forest land and to reduce legal uncertainty for investments in wind power. The measure shall be implemented from 1 January 2022 until 31 August 2026. Reform: 1.3.1.r. Disaster management system adaptation to climate change, rescue and rapid response services The general objective of this measure is to contribute to climate objectives by strengthening the response capacity of disaster and fire rescue services. The measure shall contribute to climate adaptation by shortening the response time of fire rescue services (in the framework of a more general reform integrating different services of the Ministry of the Interior under one roof). The measure is also expected to contribute to climate mitigation by moving these services to new energy efficient buildings. The measure consists of the construction of eight new energy-efficient disaster management centres.

The measure shall be implemented from 1 January 2022 until 31 March 2026. Investment: 1.3.1.2.i. Investments in flood risk reduction infrastructure The general objective of this measure is to contribute to climate change adaptation by preventing floods. It shall lead to renovate constructions that protect more than 59 000 ha from flood risks. The measure consists of investments in flood risk reduction infrastructure, including the rehabilitation of polder pumping stations, the restoration of protective dikes and the restoration of regulated sections of rivers. The measure shall be implemented from 1 January 2022 until 31 August 2026. A.2. Milestones, targets, indicators, and timetable for monitoring and implementation for non-repayable financial support Sequential Number Related Measure (Reform or Investment) Milestone / Target Name Qualitative indicators

(for milestones) Quantitative indicators

(for targets) Indicative timeline for completion Description of each milestone and target Unit of measure Baseline Goal Quarter Year 1 1.1.1 Greening the Riga Metropolitan Range Transport System Milestone Coordinated approach for passenger transport planning, ordering and organisation of the Riga metropolitan area A coordinated approach has been implemented for passenger transport planning, ordering and organisation of the Riga metropolitan area N/A N/A N/A Q4 2023 Completion of the necessary steps to implement coordinated approach. This includes among others:

— setting up a working group for the coordination of Riga metropolitan area public transport planning;

— The Riga metropolitan area public transport plan has been adopted in line with the development of passenger transport by rail in Latvia. 2 1.1.1 Greening the Riga Metropolitan Range Transport System Milestone Reform of public transport RMA Entry into service of a unified multimodal public transport route network for the Riga metropolitan area N/A N/A N/A Q4 2025 Entry into service of a multimodal public transport route network for the Riga metropolitan area with a single and harmonised timetable, single price and discount policy and single ticket for integrated public transport system Riga metropolitan area 3 1.1.1.1i. Competitive rail passenger transport within the common public transport system of the city of Riga Target Length of electric rail lines created and existing railway upgraded for passenger transport Km 0 81 Q1 2026 Electrification (change of contact network for transition to 25 kV electrification system, increase of total length of electrified lines) and related activities (construction of electric dual track sections, improvement of station track plans, reconstruction of station (incl. improvement of track plan, reconstruction of passenger platforms and construction of safe double two-level crossings and access to platforms), adaptation of signaling systems. 4 1.1.1.1i. Competitive rail passenger transport within the common public transport system of the city of Riga Target Number of urban – suburban electric trains operating (battery electric trains) Number 0 7 Q3 2026 Delivery of zero-emission vehicles (battery electric trains (BEMU)). 5 1.1.1.2i. Environmentally friendly improvements to the public transport system of the city of Riga Target Number of electric transport units operating by the city of Riga (electric buses, trams) Number 0 21 Q3 2026 Delivery of zero-emission urban public transport units, such as electric buses and trams. 6 1.1.1.3.i. Complete bike riding infrastructure Target Length of newly built or renovated cycle infrastructure in the city of Riga and Pieriga (part of Riga Metropolitan Area) Km 0 60 Q3 2026 Entry into operation of newly built or renovated cycle infrastructure. 7 1.2.1.1.i.I. Improving the energy efficiency of multi-apartment buildings and transition to renewable energy technologies Milestone Entry into force of support programme for improving energy efficiency in residential buildings Entry into force of support programme for improving energy efficiency in residential buildings N/A N/A N/A Q1 2022 Entry into force of support programme for improving energy efficiency in residential buildings with eligibility criteria to reflect requirements of applicable intervention field “025 bis – energy efficiency renovation of existing housing, demonstration projects and support measures meeting energy efficiency criteria ” of Annex VI of the RRF Regulation. 8 1.2.1.1.i.I. Improving the energy efficiency of multi-apartment buildings and transition to renewable energy technologies Target Approved projects representing at least EUR 40 097 400 EUR 0 40 097 400 Q3 2024 Approved projects by Altum representing at least EUR 40 097 400. Approval is undertaken by the development finance institution Altum. 9 1.2.1.1.i.I. Improving the energy efficiency of multi-apartment buildings and transition to renewable energy technologies Target Reduction of primary energy consumption in multi-apartment buildings with improved energy efficiency MWh/Year 0 14423 Q3 2026 Reduction of primary energy consumption in multi-apartment buildings benefitting from improved energy efficiency renovations under the measure. 10 1.2.1.2.i. Increasing energy efficiency in business, which is planned to be implemented nationally in the form of a combined financial instrument Milestone Entry into force of the Support Programme for Entrepreneurial Energy Efficiency Entry into force of Regulation N/A N/A N/A Q1 2022 Entry into force of Regulation approved by the Cabinet of Ministers supporting the implementation of programmes to improve energy efficiency of businesses.

The support programmes shall be implemented in the form of a combined financial instrument, which is a repayable loan and a capital discount.

As eligibility criteria to reflect requirements of applicable intervention field “024.ter – Energy efficiency and demonstration projects in SMEs or large enterprises and support measures meeting energy efficiency criteria [3]” of Annex VI of the RRF Regulation the aid conditions shall set a minimum primary energy saving of 30 % for energy efficiency projects in buildings and for equipment, a minimum of 30 % of average primary energy savings in the project portfolio of the RRF measure (with at least 25 % for energy efficiency equipment). In order to ensure that results are achieved, the conditions shall include a minimum threshold for energy savings per euro of public funding invested as an eligibility criterion for the project. The conditions shall include eligibility criteria to ensure compliance with the DNSH principles in line with the DNSH Guidelines (2021/C58/01) and with relevant EU and national legislation.

Support shall be provided through competitive tendering for projects with the highest expected energy savings per one euro invested. 11 1.2.1.2.i. Increasing energy efficiency in business, which is planned to be implemented nationally in the form of a combined financial instrument Target Planned GHG emission savings Co2 equivalent in t/year 0 11498 Q3 2026 Greenhouse Gases emissions savings, in Co2 equivalent per ton, based on expected emission savings as a result of the measure. 12 1.2.1.2.i. Increasing energy efficiency in business, which is planned to be implemented nationally in the form of a combined financial instrument Target Approved projects representing at least EUR 72 351 600 EUR 0 72 351 600 Q4 2024 Approved projects representing at least EUR 72 351 600. 13 1.2.1.3.i.I. Improving municipal buildings and infrastructure by promoting the transition to renewable energy technologies and improving energy efficiency Milestone Entry into force of the legal framework for a support programme to improve energy efficiency in municipal infrastructure, which supports projects with a planned reduction of primary energy or CO2 by at least 30 %. Entry into force of Cabinet Regulation Q4 2022 Entry into force of Cabinet Regulation laying down implementing conditions for improvement of local government buildings and infrastructure, promoting the transition to the use of renewable energy technologies and improving energy efficiency, with eligibility criteria to reflect requirements of applicable intervention field “026 bis – Energy recovery or energy efficiency measures for public infrastructure, demonstration projects and support measures meeting energy efficiency criteria ” of Annex VI of the RRF Regulation 14 1.2.1.3.i.I. Improving municipal buildings and infrastructure by promoting the transition to renewable energy technologies and improving energy efficiency Target Award of contracts for the implementation of energy efficiency improvement projects for local government buildings and infrastructure for at least EUR 27 838 800 EUR 0 27 838 800 Q4 2024 Notification of the award of contracts for at least EUR 27 838 800. 15 1.2.1.3.i.I. Improving municipal buildings and infrastructure by promoting the transition to renewable energy technologies and improving energy efficiency Target Reduction in primary energy consumption in municipal buildings and infrastructure KWh/Year 0 4 544 563 Q4 2025 Reduction in primary energy consumption in municipal buildings and infrastructure resulting from energy efficiency improvement measures in municipal buildings and infrastructure supported under the measure. Energy certificates may be used to demonstrate the reduction in primary energy consumption. The measures shall aim to reduce primary energy consumption by at least 30 %. 16 1.2.1.4.i.I. Improving the energy efficiency of public sector buildings, including historical buildings Milestone Entry into force of support programme for improving energy efficiency in national and historical buildings Entry into force of support programme for improving energy efficiency in national and historical buildings approved by the Cabinet of Ministers N/A N/A N/A Q1 2022 Entry into force of a support programme for improving energy efficiency in national and historical buildings, with eligibility criteria to reflect requirements of applicable intervention field 026 bis – Energy recovery or energy efficiency measures for public infrastructure, demonstration projects and support measures meeting energy efficiency criteria of Annex VI of the RRF Regulation. 17 1.2.1.4.i.I. Improving the energy efficiency of public sector buildings, including historical buildings Target Notification of contract award for representing at least EUR 16 769 200 EUR 0 16 769 200 Q3 2024 Notification to beneficiaries of contract award representing at least EUR 16 769 200. 18 1.2.1.4.i.I. Improving the energy efficiency of public sector buildings, including historical buildings Target Reduction of primary energy consumption in public buildings with improved energy efficiency MWh/Year 0 4456 Q3 2026



Reduction of primary energy consumption in public buildings with improved energy efficiency resulting from the investments supported under the measure. Energy certificates may be used to demonstrate the reduction in primary energy consumption. 19 1.2.1.5.i. Modernisation of electricity transmission and distribution networks Target Notification of contracts award to projects approved for EUR 80 000 000. EUR 0 80 000 000 Q1 2023 Notification to beneficiaries of contracts award to projects approved for EUR 80 000 000. 20 1.2.1.5.i. Modernisation of electricity transmission and distribution networks Target Connection points for electric vehicles charging and/or microgeneration installation Number 0 2060 Q3 2026 Combined number of operational connection points for electric vehicles charging and/or operational microgeneration installation 21 1.2.1.5.i. Modernisation of electricity transmission and distribution networks Milestone Entry into force of regulatory framework to ensure the transmission of electricity produced from RES to networks (including the use of forests and other public land for wind energy production) and to promote the development of wind energy infrastructure. Entry into force of: a) Legislation/regulation making state forests available for wind energy deployment, designating appropriate areas for development and making them available for bidding by private investors. b) Legislation/regulation reducing legal uncertainty for investments in wind energy by specifying cases in which investments may be rejected post impact-assessment and by introducing fast-track resolution mechanism for such cases N/A N/A N/A Q2 2024 Entry into force of: a) Legislation/regulation making state forests available for wind energy deployment, designating appropriate areas for development and making them available for bidding by private investors; b) Legislation/regulation reducing legal uncertainty for investments in wind energy by specifying cases in which investments may be rejected post impact-assessment and by introducing fast-track resolution mechanism for such cases. The measure shall ensure compliance with the DNSH principle, in line with the DNSH Guidelines (2021/C58/01), notably as regards the impacts of the measure on forests due to land use change, and with the EU environmental law. 22 1.3.1.r. Disaster management system adaptation to climate change, rescue and rapid response services Milestone Publication of a report on implementation of the disaster risk management system Publication of an information report on the implementation of the disaster risk management system approved by the Cabinet of Ministers N/A N/A N/A Q1 2022 In agreement with the institutions involved in the disaster management system, the Ministry of the Interior shall publish an informative report to the Cabinet of Ministers on the construction sites of disaster centres, construction areas and costs at each construction site, as well as the indicative timetable for the implementation of the disaster management plans to be deployed at each site and on the conclusion of construction contracts, including in the report. The report shall also include an overall reform progress report and an implementation plan on the following reform components: (i) the technical capacity building (notably on the upgrading of specialised response and rescue vehicles), (ii) the timetable for implementation of related disaster management ICT solutions and (iii) progress on implementation of training and preventive measures. 23 1.3.1.1.i. Disaster management system adaptation to climate change, rescue and rapid response services Target Construction of nearly 0 -energy-consumption disaster management and emergency response centres Number 0 8 Q1 2026 Number of newly built centres put into service. The investment shall be used for the construction of nearly zero-energy-consumption disaster management centres. 24 1.3.1.r. Disaster management system adaptation to climate change, rescue and rapid response services Target Total fire area for wild fires over the 5-year period (2020-2024) Area (hectares) 3923,1 2635,3 Q1 2025 Total area affected by wildfires counted as an average over past four consecutive years. Wild fires shall be defined as peat, dry grass, last year’s grass , bushes, trees, crop stubbles, hay, rushes and reeds, forest ground, individual tree fires, in accordance with the cumulative State Fire and Rescue Service statistics. 25 1.3.1.2.i. Investments in flood risk reduction infrastructure Milestone Construction contracts awarded for half the total number of renovations Construction contracts awarded for half the total number of renovations % 0 50 Q4 2024 Construction contracts awarded for at least 50 % of the total number of renovations by 31 December 2024 26 1.3.1.2.i. Investments in flood risk reduction infrastructure Target Area protected against the risk of flooding Area (hectares) 0 59000 Q3 2026 Area protected against the risk of flooding as a result of the investments made, in hectares. . The principles and calculations for determining the territory are laid down in Cabinet Regulation No 329 of 30.06.2015 "Regulations on Latvian Construction Standard LBN 224-15 "Meliorisation Systems and Hydrotechnical Buildings”. To ensure compliance with the DNSH principles in line with the DNSH Guidelines (2021/C58/01), the measure shall: I)where relevant, include “appropriate assessments” as referred to in article 6(3) of the Habitats Directive in order to assess the impacts of the proposed measures on protected species and habitats (as defined under the Birds Directive (Directive 2009/147/EC) and the Habitats Directives (Council Directive 92/43/EEC)). These appropriate assessments should be carried out for all projects located in or near biodiversity-sensitive areas; II)ensure that the sites in relation to which an appropriate assessment are carried out have site-specific conservation objectives and that necessary conservation measures are in place in line with the Habitats Directive; III)ensure full compliance with the Water Framework Directive (Directive/2000/60/EC) and not cause net-deterioration in the status of water bodies, in conformity with Article 4.7 of this Directive. B. COMPONENT 2: DIGITAL TRANSFORMATION The component addresses the main digital challenges - a lack of basic and advanced digital skills and low digital integration of the businesses. Moreover, the component addresses all the aspects of the digital transformation - public and private sector, skills and connectivity. The main focus of the investments is in infrastructure and services. The objectives of the component are to contribute to the digital transformation of the society and economy, including the recovery from the COVID-19 crisis, by developing the necessary infrastructure, capacities and skills; improve efficiency, digital processes, and data management in public administration; provide support to the digital transformation of businesses and improve connectivity. The component addresses the Country Specific Recommendations on skills and adult learning (Country Specific Recommendation 2, 2019, Country Specific Recommendation 2, 2020). In particular, it shall contribute to increasing the quality and efficiency of education and training with a focus on digital skills. Reskilling and upskilling measures for workers and unemployed are included, albeit without targeting low-skilled (Country Specific Recommendation 2, 2019). Investments in digital transition address the investment related Country Specific Recommendations (Country Specific Recommendations 3, 2019 and 3, 2020) - investments are envisaged in public sector IT systems, basic and advanced digital skills, digital adaptation of businesses, and connectivity. It is expected that no measure in this component does significant harm to environmental objectives within the meaning of Article 17 of Regulation (EU) 2020/852, taking into account the description of the measures and the mitigating steps set out in the recovery and resilience plan in accordance with the DNSH Technical Guidance (2021/C58/01). B.1. Description of the reforms and investments for non-repayable financial support Reform: 2.1.1r Modernisation of national processes and services and digital transformation The objective of the measure is to modernise public administration and its services by digital transformation, focusing on important functions, processes and services of the public administration that have not yet been digitally transformed, are being newly developed or substantially strengthened. The second pillar consists of modernisation measures, which are linked to the processing of essential public administration datasets and thus pave the way for the implementation of the data management reform. The reform consists of building the common ICT conceptual architecture for public administration services and their management support, defining qualitative and quantitative metrics of services. The implementation of the reform shall be coordinated and managed by the national ICT governance organisation, while the implementation of the specific tasks of implementing the reform shall be carried out by the authority responsible for each task. The reform shall be implemented by 30 June 2022. Investment: 2.1.1.1i. Administration modernisation and digital transformation of services, including business environment

The objectives of the measure are to transform public administration services and their delivery processes for the effective implementation of the digital transformation of the economy. It shall be done through the use of innovative technologies and approaches, including artificial intelligence and machine learning solutions, as well as by introducing a data-based foresight and decision-making approach to service and process management and ensuring the full implementation of the ‘once-only’ principle. The measure consists of investments in 11 individual systems or solutions: 1) digital elements of the elections processes; 2) civil protection and fire safety supervision processes; 3) public security monitoring processes; 4) library, museums and culture monuments protection processes; 5) information space monitoring processes; 6) public media sustainability processes; 7) veterinary medicinal products registration processes; 8) transportation and logistics data processing in ports; 9) Business register data processing; 10) taxation data processing; and 11) public procurement data processing. The investment shall be implemented by 31 August 2026. Reform: 2.1.2.r Increasing efficiency and interoperability in the use of national ICT resources The objectives of the reform are to transform the ICT provision approach in public administration by centralising the provision of uniform ICT sharing services in competence centres that support several institutions. The reform consists of the development of central systems and platforms of public administration and consolidation of computing infrastructure services, enabling the automation and efficiency of the processes of supply, ensure cross-border access to public administration services, and consolidation of public administration computing and data storage infrastructure services. The reform shall be implemented by 30 June 2022. Investment: 2.1.2.1.i. Centralised governance platforms and systems The objective of the investment is to ensure the functioning of the administration as a single organisation, which would include the introduction of standardised support functions such as accounting, staff administration, resource accounting and management. The investment consists of four public services delivery platforms, five departmental and support functions platforms; and six platforms and systems for the municipalities. The investment shall be implemented from 1 April 2022 until 31 August 2026. Investment: 2.1.2.2i. National Federal Cloud of Latvia The objectives of the investment are to provide shared computing and data management infrastructure and its services for the public administration, and developing the ICT infrastructure competence centres for storage and computing (Latvian Federal Cloud nodes). The investment consists of the establishment of the Latvian Federal Cloud, which provides for consolidation of public sector data storage and computing capabilities within a co-ordinated project. Initially, it consists of integrating four shared services providers - Latvia Radio and Television centre, National Library of Latvia, Ministry of Interior Affairs Information Centre and Ministry of Agriculture into the national federated cloud. Altogether three public services delivery platforms and services and seven department and support functions platforms shall be integrated into national federated cloud b. The investment shall be implemented by 31 August 2026. Reform: 2.1.3 Development of the national economy data and digital services economy The objective of the reform is to ensure the availability and sharing of public and private data and services by laying the foundations for the development and interoperability of the data and platform economy with European data spaces and by ensuring data sharing within the EU. The reform consists of developing the capacities of the public sector to collect and handle data and establishing appropriate governance principles to ensure a one-stop-shop approach for data exchange between sectors and European data spaces. The reform shall be implemented by 31 December 2023. Investment: 2.1.3.1.i. Data availability, sharing and analysis

The objectives of the investment are to promote data sharing within the public sector and between the public and private sectors, the introduction of the one-off principle and the sharing of data in the national and European area. The investment consists of creating high availability data loading and recovery solutions and a set of data objects from the education, business, citizenship and identity documents sectors (by 2023), and from social insurance and safety; land and real estate; and taxes sectors (by 2026). The investment shall be implemented by 31 August 2026. Reform: 2.2.1.r Creation of the full cycle of business digital transformation support with regional coverage The objectives of the reform are to establish European Digital Innovation Hub (EDIH), ensure its regional presence through regional contact points, and to create a single and coordinated support ecosystem to facilitate the digital transformation of commercial activities. The reform consists of establishing EDIH, a single platform/ecosystem supporting digital transformation as a one-stop-shop, establishing a digital maturity test system; ensuring the regional contact points provide the following new digital transformation support functions: digital maturity tests in regions; access to testing and piloting; mentoring and digital skills training. The reform shall be implemented by 30 September 2022. Investment: 2.2.1.1i. Support for the establishment of Digital Innovation Hubs and regional contact points The objective of the investment is to enhance digital transformation of business through offering tailored support measures based on identified digitalisation needs of companies. The investment consists of providing companies with a digital maturity test; training company representatives, identifying the investment and infrastructure needs and promoting international visibility. The investment shall be implemented by 30 June 2026. In order to ensure that the measure complies with the ‘Do no significant harm’ Technical Guidance (2021/C58/01), the eligibility criteria contained in terms of reference for upcoming calls for projects shall exclude the following list of activities: (i) activities related to fossil fuels, including downstream use ; (ii) activities under the EU Emission Trading System (ETS) achieving projected greenhouse gas emissions that are not lower than the relevant benchmarks ; (iii) activities related to waste landfills, incinerators and mechanical biological treatment plants ; and (iv) activities where the long-term disposal of waste may cause harm to the environment. The terms of reference shall additionally require that only activities that comply with relevant EU and national environmental legislation can be selected. Investment: 2.2.1.2.i. Support for the digitisation of processes in commercial activities The objectives of the investment are to promote increased productivity through targeted investment of resources, and to create higher added value in the business processes. The investment consists of a grant scheme for digitisation of the processes and functions in enterprises. Support may be granted for acquisition of IT solutions, both software and hardware, acquisition of sensors, purchase of IT equipment, IT infrastructure, implementing digital integration processes. The investment shall be implemented by 30 June 2026. Investment: 2.2.1.3.i. Support for the introduction of new products and services into business The objective of the investment is to promote the creation of new high-tech digital products and services.

The investment consists of a grant scheme for the introduction of modern automation, robotisation and labour control tools in the manufacturing and service development processes, as well as to support the introduction of personalized e-commerce solutions. Supported activities for new digital products and services include feasibility studies; industrial research; experimental development, including prototyping; and support to projects under Digital Europe programme. The investment shall be implemented by 30 June 2026. In order to ensure that the measure complies with the ‘Do no significant harm’ Technical Guidance (2021/C58/01), the eligibility criteria contained in terms of reference for upcoming calls for projects shall exclude the following list of activities: (i) activities related to fossil fuels, including downstream use ; (ii) activities under the EU Emission Trading System (ETS) achieving projected greenhouse gas emissions that are not lower than the relevant benchmarks ; (iii) activities related to waste landfills, incinerators and mechanical biological treatment plants ; and (iv) activities where the long-term disposal of waste may cause harm to the environment. The terms of reference shall additionally require that only activities that comply with relevant EU and national environmental legislation can be selected. Investment: 2.2.1.4i. Financial instruments to facilitate the digital transformation of economic operators The objectives of the investment are to boost the productivity and production process efficiency for maximum returns by supporting large-scale and productivity-oriented investments in digital transformation tools. The investments shall facilitate the introduction of Industry 4.0 solutions into production processes. The investment consists of a financial instrument scheme providing loans with grant elements for making significant changes to the overall production or service development process, to digitalise traditional processes in companies, introduce Industry 4.0 solutions (internet of things, artificial intelligence, machine learning, block chain, big data, cloud computing high performance computing) for the core business of companies. The investment shall be implemented by 30 June 2026. In order to ensure that the measure complies with the ‘Do no significant harm’ Technical Guidance (2021/C58/01), the eligibility criteria contained in terms of reference for upcoming calls for projects shall exclude the following list of activities: (i) activities related to fossil fuels, including downstream use ; (ii) activities under the EU Emission Trading System (ETS) achieving projected greenhouse gas emissions that are not lower than the relevant benchmarks ; (iii) activities related to waste landfills, incinerators and mechanical biological treatment plants ; and (iv) activities where the long-term disposal of waste may cause harm to the environment. The terms of reference shall additionally require that only activities that comply with relevant EU and national environmental legislation can be selected. Investment: 2.2.1.5i. Fostering the digital transformation of media companies The objectives of the investment are to facilitate the digital transformation of the media sector and to facilitate the adaptation of media companies to modern media consumption trends in the digital environment. The investment consists of a support scheme for investments in the development of technological solutions and improving digital skills and business models in the media sector. The investment shall be implemented by 30 June 2026. Reform: 2.3.1.r. Development of a sustainable and socially responsible support framework for adult learning The objectives of the reform are to increase the adult learning participation rate to 8% (adults aged 25-64) by 31 December 2025 and facilitate reaching other targets set in the Education Development Guidelines 2021-2027. The reform shall establish and strengthen the legal framework for a sustainable and socially responsible support system for adult learning; encourage enterprises (especially SMEs) to provide their employees with opportunities to improve their skills and competences; and create more opportunities and rights for employees to participate in education. The reform consists of the set of policy development milestones fixed in the Education Development Guidelines 2021-2027 coming into force; setting responsibilities of enterprises for education of their employees; setting up and piloting individual learning accounts; and piloting three skills funds. The reform shall be implemented by 30 June 2026. Investment: 2.3.1.1.i.: Ensuring the acquisition of advanced digital skills

The objectives of the investment are to significantly increase the number of specialists with high-level digital skills (DESI levels 3-5) that are able to apply high technology knowledge and technology-intensive new products and services to the development of new products and services in different sectors in the next six years. The investment consists of developing approximately 20 advanced digital skills training modules in quantum technologies, HPC and language technologies to be included in formal and adult education programmes. The investment shall be implemented by 31 August 2026. Investment: 2.3.1.2.i. Development of digital skills of enterprises The objectives of the investment are to increase the level of digital skills in companies. The investment consists of provision of basic, medium and high-level digital skills trainings by the European Digital Innovation Hubs in cooperation with sectoral associations, educational institutions and involving the existing Regional Business Centres. The investment shall be implemented by 30 June 2024 for the provision of training of digital skills mentors and by 30 June 2026 for the provision of digital skills trainings for employees in 3000 enterprises. In order to ensure that the measure complies with the ‘Do no significant harm’ Technical Guidance (2021/C58/01), the eligibility criteria contained in terms of reference for upcoming calls for projects shall exclude the following list of activities: (i) activities related to fossil fuels, including downstream use ; (ii) activities under the EU Emission Trading System (ETS) achieving projected greenhouse gas emissions that are not lower than the relevant benchmarks ; (iii) activities related to waste landfills, incinerators and mechanical biological treatment plants ; and (iv) activities where the long-term disposal of waste may cause harm to the environment. The terms of reference shall additionally require that only activities that comply with relevant EU and national environmental legislation can be selected. Investment: 2.3.1.3.i Development of a self-managed training approach for ICT specialists The objectives of the investment are to develop a new approach for the preparation of ICT specialists, creating a learning environment for self-managed ICT learning school to increase the share of ICT specialists, including women in the structure of employees. The investment consists of the development of a learning environment for self-managed ICT training and provision of training for at least 1000 professionals in self-managed ICT training. The investment shall be implemented by 31 August 2026. Investment: 2.3.1.4.Development of the individual learning account approach The objectives of the investment are to develop and approve the concept of individual learning accounts (ILAs) in order to stimulate adult participation in education, in particular improving digital skills. The investment consists of supporting 3500 adults to acquire digital skills through individual learning accounts. This shall be implemented by making available the best digital learning tools; using specialised solutions for high-quality machine translation and other artificial intelligence technologies, involving education experts in the validation and adaptation of localised content. The investment shall be implemented by 31 August 2026. Reform: 2.3.r Digital skills for the digital transformation of society and government The objective of the reform is to achieve at least basic digital skills level for 54% of inhabitants aged 16-74. The reform consists of a development of the common framework for the assessment of basic digital skills, the identification and planning of training needs and the assessment. The reform shall be implemented by 31 December 2022 in relation to setting up the framework, 31 December 2022 for amending higher education standards and 31 August 2026 for reaching digital upskilling targets.

Investment: 2.3.2.1.i Digital skills for citizens, including young people The objectives of the investment are providing support measures for the acquisition of digital skills for citizens from all groups of society, especially youth; introduction of a systemic approach in municipalities for the development of digital skills; development of digital and technological literacy of young people outside formal education. The investment consists of the development of digital self-service skills e-learning courses; provision of self-training and other digital training measures at local level; technological innovation activities in line with Joint Technology Creativity Guidelines for the development of youth technology and innovation capacity; municipalities programmes for the youth.. The investment aims to provide basic digital skills for at least 50 000 people, and complete digital skills programmes for youth in all 42 municipalities. The investment shall be implemented by 31 December 2024 for e-learning course development; trainings, technological innovation activities and municipality programmes shall be implemented by 31 August 2026. Investment: 2.3.2.2.i. Development of state and local government digital transformation skills and capabilities The objectives of the investment are to increase the skills of employees of public administration in digital transformation and their use of technologies, in order to develop policies fit for the digital age. The investment consists of increasing the digital competence and capacity of national government and local government employees, including digital transformation planning and change management, use of data analytics, artificial intelligence and other modern technologies to modernise operations and services, flexible ICT project management, use of modern digital infrastructures and management. The investment shall be implemented by 30 June 2023 for digital skills and competence framework and by 31 August 2026 for improving the digital skills for public administration employees. Investment: 2.3.2.3i. Closing the digital divide for socially vulnerable learners and educational institutions The objectives of the investment are to provide access to learning content and allow participating in remote learning process for the pupils from socially vulnerable groups. A framework for organisation and implementation of remote learning in educational institutions will be approved by end of 2021. The investment consists of purchasing information and communication technology equipment for general education institutions, with targeted support for pupils from socially vulnerable groups, teachers and the creation of a “computer library” in educational institutions. The investment shall be implemented by 31 December 2023. Reform 2.4.1r. Broadband infrastructure development The objectives of the reform is to promote connected automated driving and supporting sustainable mobility, including by improving road safety through innovation. The reform consists of the adoption of technical requirements for connected and automated driving, and the adoption of a common model for the development of the last mile. The reform shall be implemented by 31 December 2021. Investment: 2.4.1.1.i. Construction of the Passive Infrastructure on the Via Baltica Corridor for 5G coverage The objective of the investment is the deployment of the 5G corridor in line with the 5G Action Plan for Europe, with an initial focus on Via Baltica as a pilot project to develop other road sections in the future. The investment consists of building passive infrastructure in the Via Baltica corridor for 5G coverage, taking into account the identified investment gap and the needs of electronic communications enterprises. At a later stage of development, private investment is expected to deploy active infrastructure and provide ‘last mile’ services, including in synergy with Connecting Europe Facility.

The investment shall be implemented by 31 December 2025. Investment: 2.4.1.2i.Broadband or very high capacity network “last mile” infrastructure development The objectives of the investment are to create opportunities for regional development and stimulate demand for new digital services. The investment consists of providing 1500 households, businesses and socio-economic drivers with access to very high capacity broadband network. The investment shall be implemented by 31 December 2025. B.2. Milestones, targets, indicators, and timetable for monitoring and implementation for non-repayable financial support Sequential Number Related Measure (Reform or Investment) Milestone / Target Name Qualitative indicators

(for milestones) Quantitative indicators

(for targets) Indicative timeline for completion Description of each milestone and target Unit of measure Baseline Goal Quarter Year 27 2.1.1 Modernisation of national processes and services and digital transformation Milestone Establishment of a framework for unified governance management of ICT development activities in public administration Entry into force of the legal framework N/A N/A N/A Q1 2022 Regulations of the Cabinet of Ministers laying down common procedures for monitoring ICT development activities entered into force. For the new regulations to be applicable for all ICT development activities within the scope of the measures of the Latvian recovery and resilience plan (including municipalities), the scope of the Law of State Information Systems Law shall be extended. If adoption of the amendments to the law are delayed, temporary regulation to supplement specific normative framework for specific regulations for respective ICT project activities issued. 28 2.1.1 Modernisation of national processes and services and digital transformation Milestone Establishment of a normative framework for receiving support in the field of digital transformation of public administration processes and services Entry into force of the legal framework N/A N/A N/A Q2 2022 Cabinet of Ministers regulation entered into force for granting support in the field of digital transformation of public administration processes and services 29 2.1.1.1i. Administration modernisation and digital transformation of services, including business environment Target Descriptions of ICT solutions development activities developed and harmonised Number 0 11 Q3 2023 The ICT solutions (systems) concept models shall be developed in accordance with the adopted legal framework for ICT governance. Descriptions define ICT development activities to develop or modernize ICT solutions in the following areas : 1) digitally transformed elements of the elections processes; 2) civil protection and fire safety supervision processes; 3) public security monitoring processes; 4) library, museums and culture monuments protection processes; 5) information space monitoring processes; 6) public media sustainability processes; 7) veterinary medicinal products registration processes; 8) transportation and logistics data processing in ports; 9) Business register data processing; 10) taxation data processing; 11) public procurement data processing and analysis. 30 2.1.1.1i. Administration modernisation and digital transformation of services, including business environment Target Delivery of ICT solutions for modernised public administration functions (including systems) Number 0 11 Q3 2026 The public administration function shall be modernised with the following ICT solutions and systems fully operational: 1) digitally transformed elements of the elections processes; 2) civil protection and fire safety supervision processes; 3) public security monitoring processes; 4) library, museums and culture monuments protection processes; 5) information space monitoring processes; 6) public media sustainability processes; 7) veterinary medicinal products registration processes; 8) transportation and logistics data processing in ports; 9) Business register data processing; 10) taxation data processing; 11) public procurement data processing and analysis. 31 2.1.r. Increasing efficiency and interoperability in the use of national ICT resources Milestone Establishment of the legal framework for receiving support in the area of development of central systems and platforms of public administration and consolidation of computing infrastructure services Entry into force of the legal framework N/A N/A N/A Q2 2022 Entry into force of the legal framework for granting support in the area of development of central IT systems and platforms of public administration and consolidation of computing infrastructure services 32 2.1.2.1i. Centralised governance platforms and systems Target Approval of coordinated plans for the creation, transformation or deployment of centralised functions or services Number 0 15 Q1 2023 Before the start of the activity, to develop ICT solutions, the responsible institution shall prepare and coordinate approval of the centralised ICT function or service development plan (including with regard to the financing of services) 33 2.1.2.1i. Centralised governance platforms and systems Target Adoption of harmonised descriptions of the development activities of centralised ICT solutions Number 0 15 Q3 2023 The central platform or system developer shall develop and harmonise the conceptions of the development activities of the ICT solutions to be developed in accordance with the legal framework for ICT governance. 34 2.1.2.1i. Centralised governance platforms and systems Target Number of centralised ICT platforms and systems set up and in operation Number 0 15 Q3 2026 The following centralised ICT platforms or systems set up shall be in operation: 1) public services delivery platforms - 4; 2) departmental and support functions platforms - 5; 3) platforms and systems for the municipalities - 6. 35 2.1.2.2i. National Federal Cloud of Latvia Target Number of shared service providers integrated in the national federated cloud – cloud solutions Number 0 4 Q4 2024 The performance indicator shall be considered to be fulfilled when four shared services providers (Latvia Radio and Television centre, National Library of Latvia, Ministry of Interior Affairs Information Centre, Ministry of Agriculture) are integrated into the national federated cloud, ensuring interoperability at least at the level of mutual backup recovery and provisioning of extra computing capacity. 36 2.1.2.2i. National Federal Cloud of Latvia Target Public administration information systems modified to modern IS architecture and hosted in the national federated cloud Number 0 10 Q3 2026 The target shall be fulfilled when ten public administration systems or platforms are built or modified to be compliant with the requirements of a modular and interoperable ICT architecture and effectively use the services of the national federated cloud. Systems or platforms using the national federated cloud:

1) public services delivery platforms and services – 3 (indicative list: digital delivery platform Latvija.lv, data aggregator, subsidies management platform);

2) departmental and support functions platforms - 7 (indicative list: Resources management platform VIRSIS, Project management platform MAP, Environmental data management platform, Exporters platform, Administrative process platform, Systems in areas of Health and Welfare). 37 2.1.3 Development of the national economic data and digital services economy Milestone Entry into force of the normative framework for receiving support in the field of transformation of economic data management Entry into force of the legal framework N/A N/A N/A Q2 2022 Entry into force of the Legal framework for granting support in the field of transformation of economic data management harmonised by the Cabinet of Ministers 38 2.1.3 Development of the national economic data and digital services economy Milestone Legal framework for the functioning of the national platform for the circulation of data Entry into force of the legal framework N/A N/A N/A Q4 2023 The successful implementation of the reform shall be ensured by entry into force of the legal framework specifying the following aspects of the national platform: 1.data sharing management, including the data exchange process in the central data exchange platform; 2.the rights and duties of the participating institutions for the sharing and circulation of data within the central data exchange platform, 3.uniformed and facilitated processing of personal data within the central data exchange platform. 39 2.1.3.1.i. Data availability, sharing and analysis Target Sectors for which relevant datasets are available on the national data circulation platform (data aggregations in the environment) Number 0 6 Q3 2026 The data aggregation environment shall provide a high availability data loading/recovery solution and provides a set of data objects from the following sectors: 1) Education; business; citizenship and identity documents by 2023; 2) Social insurance and safety; land and real estate; taxes by 2026. 40 2.2.r. Creating the full cycle of business digital transformation support with regional coverage Milestone The European Digital Innovation Hub (EDIH) has been established The European Digital Innovation Hub (EDIH) has been established. N/A N/A N/A Q2 2022 The EDIH shall be fully in operation in line with the Digital Europe Programme priorities and form part of the network of a common European Digital Innovation Hub. It shall serve as a one-stop shop for the coordination of the digital transformation of businesses. (Provides a common approach and exchange of information between Regional Business Centres, the Digital Maturity Test. 41 2.2.r. Creating the full cycle of business digital transformation support with regional coverage Milestone Regional business support centres provide new digital transformation support functions Regional business support centres provide digital transformation support functions N/A N/A N/A Q3 2022 The regional business support centres shall have started providing the following new digital transformation support functions: 1.Digital m