The state will be able to use the budget money to buy state-owned companies’ documents / Article

These amendments were supported by the government and submitted to the Saeima only two days ago – Tuesday, April 23. They were viewed together with the informative report of the Ministry of Transport on the refinancing of “airBaltic” bonds. AirBaltic’s EUR 200 million bond, or to put it simply, the loan, expires in July, and it is not known whether the company itself has the ability to do so. This week, the executive director of the airline, Martins Gauss, also told Latvian Television (LTV) that attracting investors is still difficult.

Perhaps that is why the government hastily decided that the state could buy its own company’s bonds so that it would not have to invest in the company’s capital.

The main difference between investing in equity and buying bonds is that when you buy bonds, money is lent to the company at an interest rate. And in this way the country can even earn money.

It was also justified by the Budget Commission of the Saeima. The head of the commission, Jānis Reirs (“Jaunā Vienotība”), however, expressed that the big rush and the repayment deadline of the “airBaltic” loan were a coincidence.

The last time the state supported the national airline during the covid crisis, allocating 250 million euros. The State Audit assessed the support as justified, but emphasized that the state should recover funding within 5 to 7 years after the crisis.

Financial experts welcomed the proposed changes in the law on budget and financial management, which would allow the finance minister to authorize the use of state budget funds for the purchase of fixed income securities of capital companies in which the state has a decisive influence. This will allow you to refinance the existing share issue and buy new bonds, and can help in other cases to expand opportunities to succeed in the capital market.

The fact that the Minister of Finance is given a special authorization does not cause any concern, because the decision will require a separate decision of the government or the Saeima, which will ensure three-level control.

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