Effective use of financial resources for rural development of Latvia

Agriculture is a very sensitive issue in Latvia, since the number of persons employed in farming is declining, and other sectors of the rural economy cannot guarantee stable income for those abandoning agriculture. Thus state regulated financial support promoting, encouraging and supporting agricultural and rural business development through the provision of long-term, fixed interest rate loans and financial counselling services is needed. Many farmers and agricultural undertakings lack their own sources to finance investments and modernise agricultural production. The shortage of financial means leads to competitive difficulties in foreign markets. The article focuses on the study of subsidies, credit and investment flows in particular sectors, as the aim of the research is to identify the potentialities of subsidies, credits, credit guarantees and investment, and to evaluate their flows in the promotion of the development of agriculture and rural entrepreneurship. The research is mainly based on the monographic descriptive method and the methods of analysis and synthesis, and covers ca. 13 years. The research concludes that the purchase of new and efficient machinery and other equipment by means of credits could facilitate the growth of the mentioned sectors; however the amount of credits available under targeted crediting programmes is still insufficient