On Monday, April 27, 2026, Japanese credit rating agency R&I has affirmed Latvia's credit rating at A level with stable outlook.
Agency notes that Latvia`s credit rating level and stable outlook is based on conviction that while the size of the economy is relatively small, Latvia has well-diversified industrial sectors, with gross domestic product (GDP) per capita approaching US$30,000 and demonstrated reasonable resilience to geopolitical risks. R&I believes that Latvia will be able to maintain stable growth in the medium term, supported by investments utilizing funds from the European Union (EU) in addition to high economic flexibility. R&I points out that general government debt ratio is kept in check, reflecting the Latvian government's firm commitment to fiscal discipline.
Agency notes, that the fiscal deficit has remained around 2% of GDP, reaching to 2.5% of GDP in 2025, and it was contained compared to the initial plan. Agency mentions, that according to the government's plan, the fiscal deficit will stay above 3% from 2026 onward, due mainly to the budget expansion aimed at achieving the defense spending target introduced by NATO. According to the agency`s view, it is essential for Latvia to increase defense spending to ensure national security due to geopolitical risks. Agency points out, that additional defense spending can be exempted from the EU fiscal rules, and the deficit excluding the exempted spending is kept below 3% of GDP.
Agency remarks, that although the deterioration of the fiscal balance caused Latvia`s outstanding general government debt to rise, it remained a level below the average among EU members - approximately 47% of GDP as of 2025. According to the agency`s view, in future the debt to GDP ratio is expected to remain in the 50% range. Agency highlights that Latvian government has been striving to enhance fiscal discipline by aligning it with both the EU fiscal rules and the national rules. R&I points out that the interest payment burden is restrained, while cash reserves are ample. According to agency`s view, concerns over the pressure that may come from increasing government debt are contained.
R&I notes that in 2025, private consumption showed signs of recovery and investment surged against the backdrop of the vigorous private investment and the expansion of public investment buoyed by EU funds and defence reinforcement. Latvia`s real GDP growth rate was 2.1% in 2025. Agency forecasts that from 2026 onward, real GDP is expected to continue expanding at over 2% and in the medium term, growth of 2-3% is anticipated.
The previous credit rating announcement from R&I was published on March 31, 2025, when R&I affirmed Latvia's credit rating at A level, stable outlook.
The full text of a publication is available on the agency`s website.