Finances in Latvia

The financial policies, including the fiscal policy, of Latvia are managed by the Ministry of Finance. The Ministry follows the financial status of the country and manages the budget, which also involves drafting budget plans. In addition to that, the Ministry also acts as as a mediator between the government, Latvian population and the rest of the world by following the financial news, events and reporting them, as can bee seen on the official website of the Ministry.

Latvian currency

Before 2014 the official currency of Latvia was the Latvian lat (in Latvian: Latvijas lats). Thus, Latvia has kept its national currency for 10 years, since the country became the member-state of the EU in 2004. In 2014 Latvia adopted Euro as its official currency, thus joining the euro area or eurozone - a group of country whose official currency is the European euro. This also allowed Latvia to become a member of the European Central Bank or (ECB) - the central bank for the euro and the institution governing the monetary policy of the Eurozone.

Credit rating

In general, the credit rating of Latvia can be viewed as high, stable and with positive prospects. There are three major financial service and statistics providers, whose assessment can be used to measure Latvia's credit rating:

• Standard & Poor's Financial Services
• Moody's Investor Service
• Fitch Ratings

Standard & Poor's rates Latvia's credit rating as A-. This means, that Latvia as an obligor usually meets its financial commitments, but in times of economic instability may be somewhat unreliable and may struggle to meet the obligations. Nevertheless, A- shows that Latvia can be trusted in terms of financial obligations most of the time. This is further supported by the rating being classified as 'stable', meaning its prospects are unlikely to improve, but also unlikely to worsen.

Moody's rates Latvia's credit rating as A3. This is equal to Standard & Poor's A-, and so the previous description of the credit rating is also applicable in this case. It is also supported by the rating being classified as 'stable', meaning its prospects are unlikely to improve, but also unlikely to worsen.

Fitch rates Latvia's credit rating as A-. This is equal to Standard & Poor's A-, and so the previous description of the credit rating is also applicable in this case. The prospects rating is also ‘stable'.

Government debt

The government debt of Latvia is approximately equal to 39.2% of the country's GDP, which is lower than the world average. It is also lower than that of many other European countries. The relatively low Debt-to-GDP ratio also indicates that Latvia is capable of producing and selling goods without incurring more debt.