NATIONAL REFORM PROGRAMME OF LATVIA FOR THE IMPLEMENTATION OF THE EUROPE 2020 STRATEGY PROGRESS REPORT APRIL 2019 NATIONAL REFORM PROGRAMME OF LATVIA FOR THE IMPLEMENTATION OF THE EUROPE 2020 STRATEGY | PROGRESS REPORT | 2019 1 TABLE OF CONTENTS ABBREVIATIONS, MEASUREMENT UNITS, AND SYMBOLS.................................................................................... 3 INTRODUCTION ................................................................................................................................................................... 4 1. MEDIUM-TERM MACROECONOMIC SCENARIO ..................................................................................................... 5 2. IMPLEMENTATION OF THE EU COUNCIL RECOMMENDATIONS .................................................................... 7 2.1. FISCAL POLICY .................................................................................................................................................................................. 7 2.2. SOCIAL SAFETY NET, VOCATIONAL EDUCATION AND HEALTH CARE ..................................................................................... 9 2.3. EFFICIENCY IN THE PUBLIC SECTOR .......................................................................................................................................... 14 3. POLICY DIRECTIONS ................................................................................................................................................... 17 3.1. FINANCIAL STABILITY .................................................................................................................................................................. 17 3.1.1. Sustainable Budget Development ............................................................................................................................. 17 3.1.2. Ensuring Stability of the Banking Sector ............................................................................................................... 18 3.2. PROMOTING COMPETITIVENESS ................................................................................................................................................. 23 3.2.1. Business Environment and Modernisation of Public Administration ......................................................... 23 3.2.2. Promoting Productive Investments and Exports ................................................................................................ 30 3.2.3. Innovation, Research and Development ................................................................................................................. 33 3.2.4. Information and Communication Technologies ................................................................................................. 41 3.2.5. Transport and Environmental Infrastructure ..................................................................................................... 46 3.3. EMPLOYMENT ................................................................................................................................................................................ 49 3.4. EDUCATION .................................................................................................................................................................................... 55 3.4.1. Preschool Education ...................................................................................................................................................... 55 3.4.2. General Education .......................................................................................................................................................... 56 3.4.3. Secondary Vocational Education .............................................................................................................................. 60 3.4.4. Higher Education ............................................................................................................................................................ 62 3.4.5. Lifelong Learning ............................................................................................................................................................ 68 3.5. FIGHTING POVERTY, DEMOGRAPHIC CHALLENGES AND HEALTH PROTECTION ................................................................ 71 3.5.1. Reducing the Poverty Level ......................................................................................................................................... 71 3.5.2. Demographic Challenges and Health Protection ............................................................................................... 76 3.6. ENERGY AND CLIMATE CHANGE ................................................................................................................................................. 85 3.6.1. Energy Market and Infrastructure ........................................................................................................................... 85 3.6.2. Promoting Energy Efficiency ...................................................................................................................................... 87 3.6.3. Increasing the Share of Renewable Energy .......................................................................................................... 90 3.6.4. Reducing Greenhouse Gas Emissions ....................................................................................................................... 93 4. EU FUNDS INVESTMENTS .......................................................................................................................................... 96 5. LATVIA’S INVESTMENT NEEDS IN THE PROGRAMMING PERIOD 2021-2027 .....................................100 NATIONAL REFORM PROGRAMME OF LATVIA FOR THE IMPLEMENTATION OF THE EUROPE 2020 STRATEGY | PROGRESS REPORT | 2019 2 ABBREVIATIONS, MEASUREMENT UNITS, AND SYMBOLS ALMP active labour market policy measures ktoe kiloton oil equivalent RE renewable energy kWh kilowatt-hour RES renewable energy sources LB Bank of Latvia DFI Development Finance Institution FTUCL Free Trade Union Confederation of Latvia AIC Academic Information Centre ECL Employers’ Confederation of Latvia MD Ministry of Defence IDAL Investment and Development Agency of Latvia UN United Nations Organisation LQF Latvian qualifications framework JSC joint stock company MoW Ministry of Welfare MFA Ministry of Foreign Affairs LCCI Latvian Chamber of Commerce and Industry FDI foreign direct investment Mbps megabit per second bbl barrel CM Cabinet of Ministers CO2 carbon dioxide Mt megaton CSB Central Statistical Bureau Mtoe megaton oil equivalent DI deinstitutionalisation of long-term social care SME small and medium-sized enterprises DAC Demographic Affairs Centre MW megawatt WBL work-based learning NEET youth not in education, employment or training FEAD Fund for European Aid to the Most Deprived PMLTF Prevention of Money Laundering and Terrorism EDS electronic declaration system Financing EEA European Economic Area NRP National Reform Programme eID electronic identification SEA State Employment Agency CEF Connecting Europe Facility NHS National Health Service EMFF European Maritime and Fisheries Fund (2014- NGO non-governmental organisation 2020) OECD Organisation for Economic Cooperation and EC European Commission Development EQF European qualifications framework MPC mandatory procurement component ETI Emissions Trading Instrument R&D research and development EAFRD European Agricultural Fund for Rural WB World Bank Development VECC vocational education competence centre ME Ministry of Economics PINTSA Tripartite Sub-council for Co-operation in EQAR European Quality Assurance Register for Higher Vocational Education and Employment Education PJ petajoule ERDF European Regional Development Fund CSCC Cross-Sectoral Coordination Centre EU European Union VAT value added tax ESF European Social Fund YPLL years of potential life lost ESSPROS European system of integrated social protection SO specific objective statistics GHG greenhouse gas ETS Emissions Trading System LLC limited liability company EUR euro, EU single currency SKDS market and public opinion research centre FDL Fiscal Discipline Law MT Ministry of Transport FCM Financial and Capital Market Commission CDPC Centre for Disease Prevention and Control MF Ministry of Finance STEM science, technology, engineering and GWh gigawatt-hour mathematics GDE Guidelines on Development of Education TEN-T trans-European transport network for 2014–2020 MJ Ministry of Justice PIT personal income tax TWh terawatt hour LPCI Law on Prevention of Conflict of Interest CIT corporate income tax GDP gross domestic product RE Register of Enterprises ICT information and communication technologies USD US dollar SEQS State Education Quality Service MEPRD Ministry of Environmental Protection and GDIS Guidelines for Development of Information Regional Development Society for 2014-2020 SJSC state joint stock company IT information technologies SEDA State Development Education Agency MES Ministry of Education and Science SRS State Revenue Service YEI Youth Employment Initiative SC State Chancellery CF Cohesion Fund MH Ministry of Health km kilometre MTO medium-term budgetary objective MC Ministry of Culture MA Ministry of Agriculture KNAB Corruption Prevention and Combating Bureau GDSTI Guidelines for Development of Science, CCFI Climate Change Financial Instrument Technology and Innovation 2014–2020 NATIONAL