Money from Recovery Fund must be invested wisely - Steinbuka

RIGA - The funds of the recovery and sustainability mechanism must be invested wisely in order to achieve rapid growth of the Latvian economy, Inna Steinbuka, the chairwoman of the Fiscal Discipline Council, said in an interview with Latvian Radio on Wednesday.

"The plan of the Recovery and Sustainability Mechanism offers Latvia a unique opportunity - to achieve an economic breakthrough. It is quite a large amount of money that will flow into the Latvian economy. The main thing is to use this money wisely, instead of just absorbing it,'' she emphasized.

She also noted that in Latvia it is necessary to improve the quality of life of residents, but this can be achieved only if the economy grows.

At the same time, Steinbuka pointed out that the weak point of the Recovery and Sustainability Mechanism plan could be that Latvia intends to allocate a lot of funds to infrastructure projects.

"The implementation of the plan cannot be assessed before its completion - only in the end will we see a real result. So far, according to preliminary estimates, the relatively weak point of the plan is that a lot of funds are being allocated to infrastructure projects. There is a large risk that the already overheated construction sector, could overheat further, which could lead to higher prices," said the chairwoman of the Fiscal Discipline Council.

According to Steinbuka, it would be much better if more funds were allocated for innovations, as well as for the improvement of export capacity, where Latvia lags behind other European Union countries.

As reported, the European Union's Economic and Financial Affairs Council on Tuesday approved Latvia's plan for the absorption of EUR 1.82 billion from the EU Recovery and Resilience Facility (RRF), LETA was told at the Finance Ministry.

An agreement on the release of the RRF funding is expected to be signed in August. The health sector, which has already started preparing projects, will be the first to receive RRF money.