On Friday, October 31, the 29th High Council meeting between the Latvian government and the Foreign Investors’ Council in Latvia (FICIL) took place. The government and foreign investors discussed strengthening the principles of good governance in public administration, the efficient and purposeful use of resources, ensuring a fair and competitive environment, as well as, improving transparency and systemic efficiency in public procurement.
“Foreign Investors’ Council in Latvia and us have a common goal- a strong, competitive, and secure Latvia. I highly value FICIL’s long-standing cooperation with the government, which has helped implement important reforms – from budget modernisation to reducing the shadow economy. Today, we discussed the progress made and agreed to continue working on a stable tax policy, reduction of bureaucracy, and improvement of the investment environment”, – emphasized Evika Siliņa, Prime Minister of the Republic of Latvia.
Both parties agreed that good governance is closely linked to public sector efficiency, which requires the responsible use of public funds and the provision of quality services for society. By centralizing state administration support functions, strengthening shared services, and eliminating duplication of functions, it is possible to improve governance and free up resources, which are currently particularly important for Latvia’s defence sector. These measures would strengthen investors’ confidence in the predictability of state institutions and policy consistency, thereby encouraging their willingness to invest in the Latvian economy. A performance-based budget planning approach, which links allocated funding to measurable results and the quality of services provided to society, also plays a crucial role in strengthening public sector efficiency.
“Over the last year, a visible progress has been achieved in implementation of relevant economic reforms and in boosting investment attractiveness of Latvia. However, the foreign investors note that execution of reforms often happens too slowly and progress frequently stalls halfway. This is reflected in 39 FICIL recommendations, which have been partially implemented, and only 3 recommendations, which have been fully implemented over the last year. Effective and efficient public administration is a foundation for successful governance of Latvia’s economy, as it translates into well-thought through strategies, low bureaucracy, good allocation of taxpayer resources, which are directed towards most needed areas. In this regard, the foreign investors call on the government to make bold public sector reforms, such as performance-based budgeting, which should trigger change management across all levels. In addition, we are grateful that the government has agreed to prioritise critical law amendments, which are currently on hold in the Parliament”, – stated Reinhold Schneider, FICIL Chairperson of the Board.
The meeting also emphasized the importance of fair and robust competition as a prerequisite for innovation, growth, and investor confidence. The government and foreign investors agreed on the need to ensure a level playing field by clearly defining the boundaries of state involvement in the market and strengthening governance transparency in state- and municipality-owned companies. The strengthening of capacity and independence of supervisory and regulatory institutions, especially of the Competition Council, was also highlighted as essential to ensuring market neutrality and fostering predictability in the business environment.
Public procurement was viewed as a strategic tool that affects both the country’s competitiveness and the investment climate. To make it a foundation for sustainable growth, the government and foreign investors highlighted the need to strengthen oversight, professional capacity, and digital solutions, as well as, to use procurement for the implementation of national priorities – from defence to energy security.
FICIL submitted five position papers to the Cabinet of Ministers, outlining strategic proposals in the areas of Latvia’s economic development, human capital, investment protection, public sector reform, and combatting the shadow economy, setting out the main priorities for government–investor dialogue.
High-level meetings between the Latvian government and FICIL have been held since 1999, with the aim of ensuring structured information and opinion exchange between investors and local policymakers, in order to improve the business environment and promote foreign investment inflows into Latvia. The annual meetings are attended by ministers, senior officials, and executives of FICIL member companies.
At the conclusion of the meeting, the Cabinet of Ministers and foreign investors agreed on the action directions for the following year, which will serve as a framework for further cooperation in strengthening Latvia’s competitiveness.