ACQUISITION OF RESOU RCES OF THE INSTRUMENT FO R REGIONAL DEVELOP MENT – THE COHESION FU ND – IN LATVIA UNDER CONDITIONS OF GLOBAL ECONOMIC CRISIS

Abstract

The European Union Cohesion Fund provides funding for large scale infrastructure development activities (projects) to reach defined goals in the environmental and transport fields, to realize goals of European Union regional development policy, and to fulfil requirements of Directives. The aim of formation of Cohesion Fund – to level the economical and social differences between European Union member states’ and their regions – comes into effect in Latvia. Total amount of European Union Cohesion Fund resources of period 2004 – 2006 is approximately 28 212 billion Euro; expressed in prices of year 2004. Resources of Cohesion Fund were allocated to Spain, Greece, Portugal, Ireland and all ten, in year 2004 affiliated states. Financial support of the instrument for regional development – European Union Cohesion Fund – in Latvia for the 2000 – 2006 Programming period amounts to EUR 710 million (including ISPA – Instrument for Structural Policies for Pre-accession resources). Still EUR 215 million of European Union Cohesion Fund resources should be used by 2010 (including). It means that Latvia must realize European Union Cohesion Fund projects for about EUR 345 million. These great resources shall be acquired in relatively short period of time and under conditions of global economic crisis. Choice of this theme was made by lack of scientific basis for 2007 – 2013 Programming period, since only small number of scientists is involved in researches for acquisition of European Union financial instruments.
The aim of this article is to analyze flexibility of instrument for regional development – acquirement of resources of European Union Cohesion Fund under conditions of global economic crisis in Latvia and to evaluate effectiveness of Cohesion Fund resource disposition under these new circumstances. Acquirement of resources of European Union Cohesion Fund has not been studied so much; therefore it may be scientifically interesting topic. To achieve this goal there are three tasks developed – analyzed European Union Cohesion Fund resource acquirement status and status of insecure projects whose unimplementation may cause losses to Latvia state budget; discussed about two actual problems regarding this acquirement under economic crisis conditions – the value added tax rate increase and blocked financial funds of contractors’ as a result of in–advance–established guarantees; analyzed the balance of strategy of European Union Cohesion Fund aims and Latvian economic stabilization and growth renewal program. There are developed the scientifically valid suggestions for acquirement of European Union Cohesion Fund resources under crisis conditions. Most substantial conclusion has been made in connection with distribution of resources among Latvia regions. Most substantial suggestion has been made regarding to arrangement and simplification of public procurement legislation – this should boost acquirement process, since the reduction of thresholds of public procurement will shorten the time of concrete contract implementation.
This article consists of four chapters, the introduction and conclusions. Methods of analyzing and comparison were implemented to fulfil these tasks. For further investigation of European Union Cohesion Fund acquirement and its influence on development of Latvian regions, other researches should be performed.