On Friday, April 24, 2026, Fitch Ratings (Fitch) affirmed Latvia's credit rating at A- with stable outlook.
According to Fitch`s view Latvia's rating level reflects a credible policy framework, supported by EU and eurozone membership, and lower, albeit rising, government debt and debt servicing costs than rating peers. These strengths are balanced by Latvia's heightened exposure to geopolitical risks, small economy, lower GDP per capita, and a higher current account deficit relative to 'A' peers.
The stable outlook reflects Fitch's expectation that Latvia`s stronger nominal GDP growth and expected fiscal adjustment will stabilize the public debt/GDP below the peer median over the medium-term, despite a commitment to maintain high defence spending.
Fitch considers geopolitical risks to be mitigated by NATO's membership, even as the uncertainty about the US commitment to the alliance has increased. Government increased core defence spending to 5% of GDP from 2027 and projects expenditure at 4.7% of GDP in 2026, up from estimated 3.7% in 2025.
Although, general government deficit in 2025 was below agency's November forecast (2.6%) and the government's plan (2.9%), Fitch considers that higher defence spending and planned military equipment deliveries will widen general government deficits in 2026-2027 from a better-than-expected 2.5% of GDP in 2025. Agency notes that the wider fiscal deficits are compliant with the EU fiscal framework as Latvia activated the national escape clause under the EU Stability and Growth Pact. As the national escape clause expires in 2028 and Latvia plans to maintain high level of defence spending, Fitch expects next government will implement a fiscal adjustment.
Fitch forecasts public debt ratio to rise to 51.6% in 2027, from 46.9% of GDP in 2025, and to broadly stabilize afterwards. New agency’s forecast is below its November projection and reflects stronger nominal GDP growth. Fitch considers that Latvia`s public debt will stay below that of peers, but well above the prepandemic level of 37.9%.
Fitch notes that Latvian economy grew by 2.1% in 2025, up from 0% in 2024, driven by strong public capex, improving private investment and a gradual recovery in household consumption. Agency sees growth at 2.3% in 2026 and 2.6% in 2027 and points out that public investments will remain the main growth driver.
Fitch Ratings published previous assessment of Latvia’s credit rating on November 7, 2025, when rating was affirmed at "A-" with stable outlook.
The full publication is available on the Fitch Ratings website.