Bank of Latvia economist: state debt maintenance costs may increase slightly

Under current conditions state debt maintenance costs may increase slightly, said economist of the Bank of Latvia Kārlis Vilerts at a meeting of Saeima’s Sustainable Development Committee.
Although the interest rates remain very low, the high inflation is expected to contribute to a gradual rise of interest rates and, as a result, a rise in state debt maintenance costs, said the economist.
Vilerts reported that in previous years the State Treasury performed refinancing of the state debt at very low interest rates on long maturity terms. This means most state debt maintenance costs are not expected to increase soon.
Costs may increase on the part of state debts that will need refinancing soon. However, this part is small, said Vilerts.
According to outlooks of the Bank of Latvia, the country’s state debt will be 48.3% of GDP in 2022, 45.8% of GDP in 2023 and 43.1% of GDP in 2024. Last year, according to the Bank of Latvia, the country’s state debt was 45.1% of GDP.