Republic of Latvia: 2025 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for the Republic of Latvia

International Monetary Fund

No 2025/272, IMF Staff Country Reports from International Monetary Fund

Abstract: The 2025 Article IV Consultation discusses that Latvia’s successful convergence to euro area income levels has slowed. Gross domestic product per capita has fallen behind, due to weak total factor productivity and limited capital deepening. The government faces growing fiscal demands from pensions, health care, defense, energy security, and climate transition, requiring preserved fiscal space for future crises. The fiscal strategy should focus on mobilizing revenue and improving the efficiency of public spending, to preserve fiscal buffers and address rising medium- and long-term spending pressures. Also, to ensure adequate retirement income, the defined contribution pillars of the pension system should be strengthened. Financial sector policies should reassess the solidarity contribution on banks and continue to monitor banks’ exposure to the commercial real estate sector. Structural reforms should target measures to promote investment and allocative efficiency, which are crucial to reignite growth, accelerate convergence, and increase government revenue.

Keywords: IMF Latvia mission team; World Bank-International Monetary Fund mission; year Latvia; Ministry of Finance FCMC; IMF-World Bank mission; Productivity; Inflation; Global; Baltics (search for similar items in EconPapers)
Pages: 65
Date: 2025-09-19
New Economics Papers: this item is included in nep-cis
References: Add references at CitEc
Citations:

Downloads: (external link)
http://www.imf.org/external/pubs/cat/longres.aspx?sk=570482 (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:imf:imfscr:2025/272

Ordering information: This working paper can be ordered from
http://www.imf.org/external/pubs/pubs/ord_info.htm

Access Statistics for this paper

More papers in IMF Staff Country Reports from International Monetary Fund International Monetary Fund, Washington, DC USA. Contact information at EDIRC.
Bibliographic data for series maintained by Akshay Modi ().