On April 10, 2018, the Cabinet of Ministers approved the Seventh Progress Report on the implementation of the Latvian National Reform Program (Progress Report). It is prepared annually and submitted to the European Commission. The Progress Report reflects government policy for meeting the objectives of the European Union (EU) Council recommendations and the Europe 2020 strategy.
"I welcome the fact that Latvia's progress in implementing the recommendations of the EU Council has improved. This has been also recognized by the European Commission in its latest Report on Latvia of 2018. I am pleased that Latvia has already exceeded a number of goals of the Europe 2020 strategy which shows that the government's work on structural policies and reforms has been very successful over the recent years. Despite the progress made, Latvia still has to overcome several challenges, for example, avoiding the risks of the average income trap and ensuring a faster increase in the productivity of the Latvian economy,” emphasizes Arvils Ašeradens, Deputy Prime Minister and Minister for the Economy.
The Progress Report contains an updated medium-term macroeconomic scenario, described in the NRP of Latvia (approved by the Cabinet of Ministers on April 26, 2011), evaluates the progress of Latvia in addressing the recommendations issued by the EU Council in 2017, gives a detailed description of policy directions, including national quantitative targets of Latvia in the context of the Europe 2020 strategy, and reflects information on the investments of EU funds.
In 2017, Latvia received three recommendations from the EU Council – national budget and tax policy, social safety net, vocational education, health care, and the public sector.
After evaluating the implementation of the recommendations, it has been concluded that the national budget has been prepared in accordance with the Fiscal Discipline Law On January 1, 2018, the new tax reform entered into force. Work will continue on improving the social security system, implementing reforms in healthcare and strengthening the system of vocational education. Public administration reform has also been launched.
When analysing the implementation of the Europe 2020 strategy, Latvia has already surpassed its individual targets for 2020 – the employment rate is already approaching 74.8% (target 73%), the share of young school drop-outs reduced to 8.6% (target of 13.4%) and the proportion of those who have acquired higher education has increased to 43.7% (target - 36%). Latvia has the prospect of achieving the other goals for 2020 as regards to reduction of poverty and social exclusion, promoting energy efficiency, increasing the share of renewable energy and reducing greenhouse gas emissions. One of the most important challenges is the targets set for research and development, where Latvia is still lagging far behind – currently investment in research and development is 0.4% of GDP, while the target is 1.5% of GDP to be achieved by 2020.
In line with the Treaty on the Functioning of the European Union, the Progress Report together with the Latvian Stability Program form an integral part of the EU-level economic policies coordination and monitoring instrument (under the so-called European Semester). Both documents must be submitted to the European Commission by 15 April. Every year, the European Commission evaluates the two documents, and on this basis, in May, makes proposals on the EU Council recommendations which shall respectively be endorsed by the European Council at the end of June.