According to the latest data published by the Central Statistical Bureau, Latvia’s general government budget recorded a deficit of 1.093 billion dollars last year, calculated in accordance with the European System of Accounts (ESA 2010) methodology, which corresponds to 2.5% of gross domestic product (GDP).
Compared to 2024, the general government budget deficit increased by 366.9 million euros.
Meanwhile, the consolidated gross debt of the general government reached 20.174 billion euros last year, or 46.9% of GDP. In 2025, compared to 2024, the consolidated gross debt increased by 1.372 billion euros, or 7.3%.
The rise in government debt was driven by the need to secure resources to finance the budget deficit.
In 2025, general government expenditure increased by 7.7%
compared to 2024, reaching 19.8 billion euros, while revenues grew by 5.9%, totaling 18.7 billion euros.
Compared with the Treasury’s operational cash flow data, which showed a consolidated general government deficit of 1.7 billion euros in 2025, the deficit calculated by the Central Statistical Bureau according to ESA 2010 methodology is 0.6 billion euros, or 1.5 percentage points of GDP, lower.
The most significant methodological adjustments with a positive impact—reducing the budget deficit—included adjustments related to the use of Recovery and Resilience Facility funds (438.6 million euros, or 1% of GDP), claims against debtors (435.9 million euros, or 1% of GDP), exclusion of financial transactions (75.8 million euros, or 0.2% of GDP), tax adjustments using a time-shift method (63.8 million euros, or 0.1% of GDP), and adjustments for undistributed contributions in the unified tax account (30.7 million euros, or 0.1% of GDP).
At the same time, adjustments with a negative impact—those increasing the deficit—were also applied. These included balancing adjustments for foreign financial assistance flows (169.6 million euros, or 0.4% of GDP), adjustments related to future payouts of second-pillar pension scheme funds (77.3 million euros, or 0.2% of GDP), adjustments for the use of Modernisation Fund resources (40 million euros, or 0.1% of GDP), liabilities to creditors (32.1 million euros, or 0.1% of GDP), securities premium adjustments in the year of issuance (27.6 million euros, or 0.1% of GDP), adjustments for receivable interest (24.3 million euros, or 0.1% of GDP), and differences between accrued and paid interest (21.4 million euros, or 0.05% of GDP).
In previous years, Latvia’s budget deficit—calculated under ESA 2010—amounted to 726.5 million euros (1.8% of GDP) in 2024, 926.7 million euros (2.3% of GDP) in 2023, and 1.754 billion euros (4.9% of GDP) in 2022.
In accordance with EU regulations, notifications on general government deficit and debt are submitted to the European Commission twice a year—by the 1st of April and the 1st of October. These results are used to assess whether EU member states comply with the Maastricht criteria, which stipulate that the general government deficit must not exceed 3% of GDP and government debt must not exceed 60% of GDP.
Read also: Opinion: Ban on Belarusian fertilizer transit fuels Russia’s war treasury