Latvia’s general government debt amounted to 46.9% of gross domestic product (GDP) at the end of last year, according to the annual report of the State Treasury.
The debt increased by 0.1 percentage points compared to the end of 2024, when it stood at 46.8% of GDP.
The State Treasury notes that while Latvia’s general government debt is growing, it remains among the lowest in the European Union and below the EU average.
The level of general government debt is primarily driven by state debt, which, according to preliminary data from the Treasury, reached 20.5 billion euros at the end of 2025—an increase of 1.6 billion euros compared to the end of 2024.
The rise in state debt was mainly due to the need to finance the government budget deficit, influenced by increased spending on national defence, the Treasury explained.
In the structure of state debt, the largest share—88%—consists of eurobonds issued in financial markets.
The report states that in 2025 the State Treasury conducted borrowing operations in international financial markets during both the first and second halves of the year, issuing five-year bonds worth one billion euros in May and ten-year bonds worth 1.25 billion euros in September.
As the maturities matched investor demand, interest in the bonds exceeded supply, reaching 2.5 billion euros for the May issuance and 3.3 billion euros for the September issuance. This strong demand, combined with well-timed issuance, allowed the State Treasury to secure financing on favourable terms.
The investor base for Latvian government securities traditionally consists of banks, asset managers, and international financial institutions from European countries, including Germany, Austria, the United Kingdom, Ireland, and the Nordic countries.
The report also notes that in 2025 the State Treasury organized regular auctions through primary dealers, offering additional tranches of eurobonds already in circulation, with maturities ranging from 2028 to 2033.
The Treasury focused its auction offerings on maturities that ensured the strongest investor demand and the most favourable borrowing conditions under prevailing market circumstances.
Primary dealers participating in 2025 auctions included Citadele banka, Luminor Bank, SEB banka, Swedbank, and Erste Group Bank. In February 2026, the State Treasury expanded its network of primary dealers by signing an agreement with DZ Bank, one of Germany’s крупнейших banks.
The total volume of funds raised through primary dealer auctions in 2025 reached 950 million euros. The Treasury conducted 18 auctions offering securities with varying maturities. According to the Treasury, this approach improves liquidity and promotes trading in the secondary market. Since only additional tranches of eurobonds have been offered at auctions, international investor interest in Latvian government securities has increased, enabling the state to borrow at favourable interest rates.
To ensure broader access to government securities in the primary market, the Treasury offered securities with a minimum investment of 1,000 euros in 13 auctions. In the remaining auctions held in 2025, the minimum investment amount was 100,000 euros.
Investor demand and Treasury offerings were concentrated on securities with remaining maturities of three to five years. Demand exceeded the volume sold by an average of three times, and in some auctions up to six times.
Amid continued strong demand for liquid government securities and declining market interest rates, fixed yields ranged from 2.42% to 3.378%, depending on maturity and market conditions, the report states.
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