RIGA, April 23 (LETA) - Finance minister could be authorized to use state budget funds to purchase fixed-income securities of companies in which the state holds a majority stake, according to amendments to the Law on Budget and Financial Management submitted by the Transport Ministry to the government.

The amendments stipulate that the finance minister will be authorized to acquire fixed-income securities of companies in which the state holds a majority interest, provided that this will have a positive effect on the state budget in the long term, by a decision of the Cabinet of Ministers and a separate decision by Saeima.

Currently, the conditions for state budget investments are determined by the fiscal policy provisions laid down in the Law on Budget and Financial Management, which do not allow the Treasury to borrow in order to acquire long-term fixed income securities. These provisions currently allow only short-term transactions using the available funds.

The Transport Ministry explains that the proposed amendments, which would allow the state to purchase bonds issued by government-run companies, would significantly facilitate the development of the Latvian capital market. These changes would allow the state to play a more active role as an investor not only in the financial sector, but also in strategically important companies.

By acquiring fixed-income securities in government-run companies on an equal footing with private investors, the state will be able to foster the development of a more attractive and competitive investment environment, explains the Transport Ministry. This approach would not only stabilize and strengthen state-owned companies, but also create a positive environment for the development of the Latvian capital market.

Along with the amendments, the Transport Ministry has submitted to the Cabinet a report on progress with refinancing of bonds issued by Air Baltic Corporation. This report has a classified status.

As reported, the EUR 200 million bonds issued by national airline airBaltic are maturing in July 2024, so the airline will seek external financing to refinance the bond, and it also plans to raise additional financing of around EUR 100 million.

"In addition to the EUR 200 million refinancing, the airline plans to raise an additional EUR 100 million to improve its cash balance and to facilitate the financing of further capital investments related to capacity expansion," says the airline's 2023 annual report.

It also mentions that airBaltic has engaged international investment banks and financial advisors and is working in parallel on various refinancing options, including raising funds on the public debt market and on the private debt market.

Last year, airBaltic's audited turnover was EUR 664.289 million, up 33.2 percent on 2022, and the company made a profit of EUR 33.852 million, compared to a loss the year before.

The Latvian state owns 97.97 percent of airBaltic's shares, while the financial investor, Danish businessman Lars Thuesen's Aircraft Leasing 1, owns 2.03 percent.