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Riga, Oct 10 (LETA) - Local governments will be able to borrow money not only from the Treasury but also from commercial banks to implement investment projects, according to amendments to the Regional Development Law approved by the government today.

Thus, if another lender offers more favorable loan conditions for the implementation of an investment project developed by a municipality for pre-school educational institutions, schools, roads, streets and bridges than those offered by the Treasury, the municipality will be able to choose another lender.

These amendments will provide municipalities with a wider choice of lenders and, consequently, will enable credit institutions to provide their lending services to municipalities.

The amendments have been prepared at the initiative of local governments and banks. They still have to be approved by the Saeima.

As reported earlier, this week the government endorsed the draft Memorandum of Understanding and Disagreement between the Cabinet of Ministers and the Latvian Association of Local Governments (LPS).

The government agreed to increase the proportion of personal income tax revenues to local governments from 75 percent to 78 percent, while reducing the state's share from 25 percent to 22 percent.

Among other issues agreed with the municipalities, the overall limit for 2025 and medium-term municipal borrowing will be increased by EUR 50 million. The implementation of EU funds and Recovery Fund projects remains the main borrowing priority in the medium term.

The agreement provides for an annual allowable increase in borrowing by municipalities in 2025, 2026 and 2027 of EUR 168 million.