European financial support for the member states: Latvian example

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Assistance of the EU’s institutions to the member states during Covid-pandemic takes various forms. Thus, European Investment Fund, backed by the Investment Plan for Europe, in association with the national financial services, provides favourable lending to students and learners in the EU states to cover their study and housing costs. Now Latvian students and learners are expected to benefit from a new European Investment Fund-ALTUM agreement which would make available cheap loans to cover study costs.

In line with the EU’s integration rules, the member states’ budget allocations are strictly regulated by the EU institutions: among existing seven (the European Parliament, the European Council, the Council, the European Commission, the Court of Justice of the European Union, the European Central Bank and the Court of Auditors, art.13, TEU) it is the Commission’s staff that controls national finances. The means are numerous: from the European Semester and EU’s funds’ usage to the so-called “state aid” regulations, etc.
The European Central Bank, ECB (full functioning from January 1999), as one of seven EU institutions is the prime component of the Eurosystem (for states using common EU currency, euro) and the European System of Central Banks, ESCB; it is one of the world’s most important central banks. The primary objective of the ESCB is to conduct the EU’s monetary policy, maintain price stability and support the general socio-economic policies in the EU and the member states (art. 282, TFEU).
However, there are other means to support national priorities in the lack of finances: i.e. the European Investment Bank Group, EIBG and the European Commission are major drivers in financial assistance to the member states’ plans in economic recovery and resilience. For example, under the Investment Plan for Europe, the two bodies promised to trigger €315 billion of additional investment in the states; the key to fulfilling this promise was a €21 billion guarantee program commonly called the European Fund for Strategic Investments, EFSI. Actually, the latter was launched in July 2015 through the cooperation between the EU and EIBG. More in:
During 2021, the InvestEU-program has becomes a new EU long-term financing program, building on the success of EFSI, bringing together, under one roof, the EFSI and 13 other EU financial instruments triggering more than €372 billion in additional investment over the period 2021-27 to give an additional boost to sustainable investment, innovation and job creation in Europe. Source:; Note: For more than 50 years, the EIB has been the main EU’s international development bank.

Supporting growth and business
The European Investment Fund is part of the European Investment Bank Group, EIBG; its mission is to support various European companies (big, small and even micro) by helping them to access necessary financial resources. EIF designs and develops venture and growth capital, guarantees and microfinance instruments which specifically target this market segment. In this role, EIF fosters EU objectives in support of innovation, research and development, as well as in entrepreneurship, growth and employment.
EFSI is at the same time the main pillar of the Investment Plan for Europe; it provides first-loss capped guarantees enabling the EIB Group to invest in riskier projects. The projects and agreements approved for financing under EFSI have so far mobilized €546.5 billion in investment; the amount which benefitted over 1.4 million SMEs; it is not that much, as there are over 20 million SMEs in Europe!
A special EIF’s program (“Skills & Education Guarantee Pilot”) includes a debt financing initiative dedicated to stimulating investments in education, training, and skills – as part of the solution to get more people into jobs and to better respond to the states’ social-economy growth and needs. The main goal is clear: investments in skills contribute to growth, competitiveness, and social convergence while addressing the challenges linked to digital transformations and the transition to a carbon-free economy.
See more in the EIF’s website:

Support for students and national recovery plans
On the Latvian side, there is a special financial institution -ALTUM – as a state-owned development finance institution, offering state aid to various target groups with numerous financial tools (e.g. loans, credit guarantees, investment in venture capital funds, etc.).
ALTUM develops and implements state aid programs to compensate for the market’s shortcomings that cannot be solved by private financial institutions; however, some study and student loans in Latvia are issued by Swedbank too. In June 2017, ALTUM was awarded the international credit rating Baa1 by Moody’s, which approves its strong financial stability.
Since the beginning of the program, more than 3300 study support and student loan agreements have been signed with ALTUM for a total amount of over €23 million.
ALTUM Management Board Chairman, Reinis Bērziņš noted that: first, the EFSI’s guarantee makes it possible that starting with the next academic year the study’s guarantees and student loans will be available to more students; second important element in the new EFSI guarantee is that it will cover study and student loans for studies abroad.
Note: ALTUM history. Altum’s predecessor, Latviajas Hipotēku Banka (Mortgage Bank) operated since 1993 until the end of 2013, then turning into a present State Joint-Stock Company Latvijas Attīstības finanšu institūcija Altum (Latvian Development Financial Institution Altum). Voting rights and shares in ALTUM belong to the Latvian state: to Ministry of Finance (40%), Ministry of Economy (30%), and Ministry of Agriculture (30%). As soon as ALTUM provides state-owned financial resources, its activity is guided by the EU’s state aid regulations.
A final constituent’s step in ALTUM’s occurred in April 2015, in forming an “integrated financial institution” (through the merger of two other lending-providing institutions: Latvian Guarantee Agency and Rural Development Fund). Source:
Supported by the Latvian Ministry of Economy, Altum launched a Covid-19 Working Capital Loan Program (in spring 2020, in the amount of € 200 million), to support Latvian businesses impacted by the Covid-19 crisis. To expand the capabilities of this program and to safeguard Latvian businesses and jobs, in July the European Investment Bank lent ALTUM €80 million in Covid-related financing; Latvian government provided additional €50 million. So far, the European financing has helped ALTUM to support 475 Latvian companies (out of thousands in LV’s companies register), thus safeguarding more than 1580 jobs. Source:

Note: On EIB in Latvia. EIF Chief executive Alain Godard commented: “the present scheme is hugely important in allowing more people to attend higher education and develop their skills, with both personal and economic benefits, especially for those who would otherwise not be able to afford it. ALTUM’s program is an excellent initiative and we are glad to be able to rely on the support of the European Commission to achieve this.” Citation from:
In the last five years, the EIB has provided over €460 million in financing to numerous Latvian projects. The EIB’s relationship with ALTUM dates back to 2009, when a €100 million loan was signed with Latvijas Hipoteku un Zemes Banka, ALTUM’s predecessor. In the face of the ongoing pandemic crisis, the EIB and its subsidiary the EIF, make available loans, guarantees, asset-backed securities, equity and other financial instruments (mostly to SMEs) to boost those parts of the state’s economy and a healthcare sector that were hit the worst.
More on EIB in Latvia in:

No doubt, Latvian representative in the Commission, Valdis Dombrovskis, presently serving as its executive vice-president, was glad for the EIB/EIF-Altum decision: support for Latvian students looking to advance their education and skills through loans at favourable conditions and guarantee scheme will allow more young people to cover their tuition fees and living expenses.
However, the EU’s assistance to other Baltic States’ neighbors has been more generous: thus, supports for SMEs in Poland (for leases and financing) reached €635million.
In June 2020, Altum launched a guarantee scheme with other Latvian commercial banks to support financing for students with loans covering both tuition fees and living expenses; the scheme was positively received by the market and governance bodies in Latvia and the EU; now, the European Investment Fund (backed by the “Skills & Education Guarantee Pilot” of the European Commission’s Investment Plan for Europe) in partnering with ALTUM has continued the program to increase the number of beneficiaries. Thanks to the EFSI’s education guarantee, Altum will be able both to support a larger number of Latvian students and learners, but also extend the program to non-academic trainings for learners and tuition fees, as well as including the living expenses for studying abroad.
ALTUM and the European Investment Fund, backed by the Investment Plan for Europe, are enabling more favourable lending to students and learners in Latvia, to cover their study and housing costs. The EIF-ALTUM agreement to support students and learners in Latvia would allow about 13, 5 thousand students and learners in Latvia to benefit from cheaper lending conditions to cover their study and housing costs.
The guarantee programme is supported by the “Skills & Education Guarantee Pilot” under the European Fund for Strategic Investments, main pillar of the Investment Plan for Europe.
Up to 13.500 students and learners in Latvia are expected to benefit from favourable loans to support their studies as well as their cost of living.
Reference: Commission press release “Latvia: students to get affordable European-backed study loans through ALTUM” in:

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