At the end of last year, Latvia’s general government debt stood at 46.8% of the country’s gross domestic product (GDP), according to the annual report by the State Treasury.
The debt ratio increased by 3.2 percentage points compared to the end of 2023, when it was 43.6% of GDP.
At the same time, the Treasury noted that Latvia’s debt level remains one of the lowest among European Union (EU) member states and is significantly below the EU average of 81% of GDP.
The overall government debt level is primarily driven by national debt, which, according to preliminary data, reached 19 billion euros by the end of 2024, an increase of 1.4 billion euros since the end of 2023. Bonds issued in financial markets made up the largest share of national debt—85% of the total.
The report explains that, in response to a highly volatile and uncertain global financial market—shaped by geopolitical tensions, armed conflicts, political events, and other factors—the Treasury diversified its borrowing strategy in 2024 to ensure necessary funding.
This included issuing bonds in international markets, conducting tap auctions of existing bonds through primary dealers, and issuing savings bonds to individuals.
The Treasury emphasized that in unpredictable global markets, borrowing opportunities often depend on short windows of investor optimism and temporary market stability. The borrowing strategy has thus focused on seizing these favorable moments to secure funding on the best possible terms.
In May, Latvia strategically returned to the U.S. dollar market for the first time in 12 years by issuing 10-year benchmark bonds worth 1.25 billion US dollar under favorable terms. To eliminate currency risk, a simultaneous currency swap was executed, resulting in an effective interest rate lower than comparable euro-denominated borrowing costs.
In September, the Treasury raised 600 million euros by issuing seven-year euro bonds,
attracting record-high demand and one of the largest investor bases in the history of Latvia’s euro-denominated bond issuances.
As in previous years, Latvia’s investor base in 2024 primarily consisted of banks, international financial institutions, and asset managers from the U.S., Germany, Austria, the UK, Ireland, and other European countries.
Since 2014, the Treasury has used the Global Medium Term Note (GMTN) program as its legal framework for borrowing in international markets. This allows for flexible, multi-currency issuance of government securities.
In 2024, the Treasury held regular auctions through primary dealers, offering additional tranches of existing bonds with maturities between 2027 and 2036. These auctions focused on maturities with the highest demand and most favorable borrowing terms.
Primary dealers participating in these auctions include Citadele Bank, Luminor Bank, SEB Bank, Swedbank, and Erste Group Bank.
In 2024, auctions of additional tranches of bonds raised 1.085 billion euros—similar to the amount raised through auctions in 2023.
The report highlights that offering additional tranches has improved bond liquidity and enhanced trading activity in the secondary market. It has also increased international investor interest in Latvian government securities, enabling the Treasury to secure funding at attractive interest rates.