Growing the state debt even more will not help resolve Latvia’s problems, said Governor of the Bank of Latvia Mārtiņš Kazāks in an interview to LTV programme Rīta panorāma.
“We have a safety pillow for one more crisis,” said Kazāks, stressing that the state debt should not be taken lightly.
He also mentioned that it is necessary to enhance economic growth, because, by growing the economy, the debt becomes smaller when compared to the size of the economy.
Kazāks also said Latvia’s share of state debt in relation to the gross domestic product (GDP) is relatively small.
“The buffer is only for one crisis and this buffer must not be wasted. Consequently, growing the debt further is not the solution to Latvia’s problems. The solution to Latvia’s problems is faster economic growth,” said the Governor of the Bank of Latvia.
He also said it is necessary to discuss ways to promote household consumption, because at the moment residents are more inclined to save, not spend.
Data from the State Treasury indicates that as of the end of October 2024, the nominal value of the government’s debt was EUR 19.42 billion or 46.36% of the projected GDP.
According to the data from the Central Statistical Bureau of Latvia, in 2023 the consolidated gross debt of the general government amounted to EUR 17.578 billion or 45% of GDP. Compared to 2022, the consolidated gross debt of the general government in 2023 increased by EUR 1.54 billion or 9.6%. The growth of general government debt in 2023 was affected by the issue of three new Eurobond.