Latvia's Economic and Financial Outlook

25 Reform Policies Laying Foundation for New Growth Model Structural reforms help strengthening Latvia's growth potential. Labour Market, Social Policy and Healthcare Addressing labour market issues through education and employment policies; decreasing tax burden on labour; activating social benefit recipients; improving accessibility, quality and efficiency of healthcare Decrease of the tax burden on labour, increase of the untaxed minimum, etc. Activation of unemployed through active labour market policy measures • Strengthening vocational education and introduction of the work-based learning principle Comprehensive healthcare reform (new healthcare financing model, increase in remuneration of healthcare personnel, etc.) Business Environment SME access to financing, export oriented programmes, reduction of administrative burden • Support programmes of the Latvian Investment and Development Agency and ALTUM are being implemented (business incubators, credit guarantees, loans, etc.) Annual Action Plan on Improvement of the Business Environment is being implemented, etc. Education, Research and Innovations Increasing the quality of education and research, fostering investments in R&D and innovations . Smart Specialization Strategy is being implemented Support programmes are being implemented (support in introduction of new products, Innovation Motivation Programme, wider involvement of SOEs in research, development and innovation activities is being ensured, support for start-ups, etc.) 2017 OECD Reform Responsiveness Index, % Public Administration and Judiciary Increasing efficiency of public administration, strengthening the conflict of interest prevention regime, improving tax compliance; improving the insolvency regime and accountability of insolvency administrators Public sector reform is being implemented Administrative Territorial Reform 80 • Whistleblower protection law in force since 1 May 2019 Improvement in the insolvency process and tax compliance is being observed OECD 40 20 Bringing together municipalities in more sustainable and economically stronger units that are able to ensure the performance of autonomous functions of local governments in comparable quality and accessibility 0 60 The new model is planned to be introduced starting from 2021 Source: 2019 National Reform Programme; European Commission's Country Report Latvia 2019; EU Council's recommendations 2019; OECD Economic Survey on Latvia 2017, 2019 SVK HUN SWE USA COL DECD average NLD CZE CHN ISR CHL LATVIA

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