Translated using ChatGPT service.
In 2024, Latvia's economic development continued to be influenced by the geopolitical situation and prevailing uncertainties, as well as the slow recovery of export target markets. For the Ministry of Economics (EM), this year has been one of intensive work, focusing on providing significant support to entrepreneurs in areas such as productivity, digitalization, energy efficiency, export capacity, and competitiveness. At the same time, the Ministry has implemented several activities to ensure that state support in 2025 aligns with the needs of businesses. Additionally, we have carried out measures to improve housing availability for residents and enhance their overall well-being. Below is a summary of the main accomplishments of the Ministry of Economics in 2024.
To accelerate improvements in the standard of living and economic prosperity for Latvia’s population, we have developed a new growth strategy for Latvia’s economy. The report, "On the Development of Latvia's Economy: Productivity, Competitiveness, Growth," aimed to initiate discussions and public debates in the Saeima about the challenges facing Latvia’s economic development and the country’s growth priorities. The Saeima's economic policy debates represent a new paradigm or approach to making well-considered decisions about the country’s development vision, goals, and policies.
Although 2024 has not been an easy year, we have worked diligently to implement Latvia's economic growth strategy, with the primary goal of doubling the size of Latvia's economy within ten years. "Step by step, we will continue to act next year to boost the productivity of Latvian businesses and reduce bureaucracy," said Minister of Economics Viktors Valainis.
The Latvian Fiscal Structural Plan for 2025–2028 outlines Latvia’s fiscal policy for 2025–2028, with the goal of ensuring the sustainability of public finances and national debt. It also includes structural measures, reforms, and investments, including European Union (EU) funds and Recovery Fund measures aimed at enhancing Latvia’s competitiveness, productivity, and progress in the digital and green transitions. By participating in the preparation of this plan, we have developed structural components on reforms and investments.
Support for Entrepreneurs
A constant and extensive support for businesses has been provided to enhance business competitiveness, facilitating the availability of Altum financing up to 100,000 euros for small and medium-sized enterprises by reducing collateral requirements and loan rates for agricultural working capital loans.
Measures have been implemented to attract investments. With the "Innovative Entrepreneurship and Priority Projects Support Law," the "Green Corridor" has been established to promote high-value-added and export-oriented investments in Latvia. The continuation of the Investment Fund's activities has also been ensured for investments in large, nationally significant export-oriented projects. This year, the work of the Coordination Council for Large and Strategically Important Investment Projects was restored, ensuring coordinated interdepartmental cooperation for the successful implementation of investment projects in Latvia's national interests. A reform of the Latvian Investment and Development Agency was implemented, focusing its activities more on investment attraction and export promotion.
Availability of support for research and innovation has been ensured. Innovation is the main driving force for economic growth. To encourage businesses to invest in research and development, three support programs for the development of new products and technologies have been developed, allocating more than 108 million euros. Support is provided through Competence Centers in the fields of smart specialization strategies. Support in the form of grants of up to 1 million euros for industrial research, experimental development, and technical and economic feasibility studies is available to micro, small, medium, and large enterprises. In 2024, a long-term research program of the Innovation Fund for commercial research in the fields of biomedicine and smart materials was launched, which is planned to be implemented in collaboration with the Latvian Science Council in several stages until 2032.
A series of measures has been implemented to establish an Artificial Intelligence Excellence Center in Latvia – a cooperation memorandum with Microsoft has been signed, in which the Latvian side commits to continue developing the National Artificial Intelligence Center and other digital initiatives in collaboration with Microsoft. The purpose of the memorandum is to promote the use of artificial intelligence and digital solutions to modernize public administration processes, as well as to develop Latvia's innovation and technology ecosystem. This cooperation will not only accelerate the delivery time of public administration services but also improve their quality, efficiency, and accessibility for residents and businesses.
The government has supported the establishment of the National Microchip Competence Center in Latvia while deciding that the Latvian Investment and Development Agency will be designated as the competent authority (single contact point) responsible for coordinating issues related to the implementation of the Chips Act and cross-border cooperation with competent authorities of other Member States. Riga Technical University (RTU) will serve as the consortium coordinator of the National Microchip Competence Center in Latvia.
A support program for the development of dual-use new products has been developed. Considering that the security and defense sector requires vital investment due to risks caused by the current geopolitical situation and national and EU-level priorities, proactive funding has been allocated to research activities to strengthen security and defense capabilities. Support in the form of grants for industrial research, experimental development, and technical and economic feasibility studies will be available to micro, small, medium, and large enterprises. The total available funding is 29 million euros.
Training programs have been developed and launched. Since mid-2024, businesses have had access to support for developing digital skills from Recovery Fund resources, with training applications available through industry associations or EDIC. This year, an EU fund program for sectoral training was also approved, with project implementation planned to begin in the second quarter of 2025. Training applications will also be available through industry associations. The total funding available for training programs is 28.7 million euros.
This year, Recovery Fund support for improving energy efficiency in businesses has also been provided (including the transition to renewable energy technologies for heating), with funding of 80.5 million euros. Within the support program, Altum implemented a total of 10 selection rounds, concluding 260 contracts with businesses for support totaling 70 million euros. Applications for support can be submitted until January 21, 2025.
To strengthen the EU supply chains for the development of critically important offshore wind technology production in Latvia, more than 64 million euros are planned to be invested in the development of Riga Freeport infrastructure. As a result, a green industrial area will be created in Riga Freeport, where businesses will be able to develop production facilities for offshore and onshore wind technology and components. By developing a green industrial area on 30 hectares within the Riga Freeport territory, further business development and investment attraction will be promoted in the port and adjacent territories (total area 60-90 hectares). By developing the port territory and leasing out the constructed area to companies manufacturing wind energy technology components, exports of 160 million euros are projected, 650 jobs will be created, and annual tax payments of at least 7.8 million euros will be ensured.
Improving Housing Accessibility
Amendments to the regulations to facilitate the management and renovation of multi-apartment buildings. The so-called "minority voting" principle has been introduced, which provides protection for apartment owners who are actively involved in the management of the residential building but are in the minority and thus unable to make significant decisions due to the inactivity of the majority. Amendments to the Apartment Property Law grant the minority of apartment owners the authority to decide on house management issues in the case of a repeated general meeting.
Meanwhile, amendments to the Apartment Property Law and the Residential Building Management Law, approved by the Cabinet of Ministers, propose the introduction of a legal real burden, or the principle of "debt follows the apartment." These amendments to the laws still need to be approved by the Saeima.
Construction of low-rent housing in the regions. With Altum support, the construction of six low-rent housing projects has already begun in various Latvian cities, with a total of more than 420 new apartments. Rental housing projects in Valmiera, Bauska, Jelgava, Tukums, and Ventspils are at various stages of readiness and construction, and a contract is being signed for the construction of a 54-apartment rental building in Cēsis. In total, the program co-financed by the EU Recovery Fund aims to build at least 467 affordable rental housing units.
Meanwhile, to promote the availability of quality social rental housing for socially and economically vulnerable persons, a support program has been approved for municipalities to renovate spaces and buildings in their ownership and build new residential houses with more than €50 million in funding.
Support from Recovery Fund resources amounting to €57.28 million has been implemented to improve energy efficiency in multi-apartment buildings and transition to the use of renewable energy technologies. Within the support program, agreements have currently been signed with 63 multi-apartment buildings.
State support for residents to purchase and construct housing, as well as to cover electricity costs, continues and was expanded in 2024. This year, the government decided that mortgages for purchasing or constructing residential spaces issued by consumer credit service providers or credit unions (i.e., non-bank lenders) will also be eligible for state support through Altum guarantees or the "Balsts" subsidy program. Support continues for protected users, including large families, families with children with disabilities, persons with Group 1 disabilities, as well as low-income or disadvantaged persons to cover electricity costs.
Normative regulations have been developed (amendments to the Consumer Rights Protection Law, Credit Institutions Law, Notary Law, and Insurance Contract Law) to refinance consumer mortgage loans with another credit service provider, reducing barriers to mortgage refinancing, including costs and the time required for the process, promoting competition among consumer credit service providers, developing proposed solutions for mortgage borrowers, and reducing high mortgage interest rates. As a result of the changes, a significant reduction in refinancing costs for residents will be achieved, the process will take no more than two months, and it will become simpler for the consumer. Moreover, the entire process can be carried out remotely.
Improving the Construction Process
To reduce the administrative burden in real estate development, the government approved an action plan containing approximately 60 measures aimed at simplifying and making the real estate development process more efficient. Each subsequent stage will logically follow the previous one, while maintaining guarantees for public rights and safety. Real estate owners will receive a clear response at the earliest possible stage regarding what can be built on a specific plot of land, ensuring legal certainty throughout the process, from spatial planning to the registration of buildings in the land register. The approved plan is significant for reducing bureaucracy, attracting investments, increasing Latvia’s regional competitiveness, and fostering growth in the real estate development and construction sectors.
Amendments to the Law on the Registration of Real Estate in Land Registers have also been prepared, significantly simplifying the registration process in the land register for buildings constructed through the simplified procedure, i.e., based on a construction notification. Meanwhile, amendments to the Spatial Development Planning Law will shorten the approval process for spatial planning documents.
To limit the shadow economy in construction, electronic work time tracking (EDLUS) will be introduced at construction sites starting in 2025. This will apply to projects with construction costs of at least €170,000. Additionally, the permissible discrepancies in EDLUS data will be reduced, enabling a more accurate assessment of hours worked.
Measures have been implemented to establish a unified building registration process, eliminating cadastral surveying (inventorying) during the construction process. Building registration will instead rely on data obtained during construction.
Delegation agreements have been concluded with non-governmental organizations for evaluating the competence of construction specialists and supervising independent practice for a 10-year period (instead of the previous 3-year period).
Strengthening Security
A new, more efficient model for the acquisition of state oil product security reserves has been implemented, and the creation of essential goods reserves has begun. Gradually, by 2029, 100% of the oil product security reserves will be acquired as state property, which will save €877 million over the next decade. In 2024, a legal framework was developed, establishing procedures for ensuring the population with essential goods in the event of a national threat. The task of providing the population with essential goods has been delegated to SIA "Publisko aktīvu pārvaldītājs Possessor," and organizational measures to supply essential goods have been initiated (including the announcement of certain procurements for the acquisition of essential goods).
At the same time, to allow the aviation industry to optimize costs associated with the formation and maintenance of state oil product security reserves without increasing the financial burden on those businesses and end consumers who use gasoline or diesel fuel, a legal framework was developed to exempt the aviation industry from the obligation to pay service fees for aviation fuel consumption. This framework stipulates that the aviation industry will maintain its own security reserves.
Additionally, active involvement has been undertaken this year to ensure the successful implementation of prerequisites for Latvia's accession process to the International Energy Agency.
For the implementation of the Digital Services Act in Latvia, the government supported amendments to the Information Society Services Law. The Digital Services Act is the first of its kind globally, aiming to make the online environment safer, more predictable, and more trustworthy for all users. It imposes new obligations on intermediary service providers in the digital sector to reduce the spread of illegal content online and mitigate various social risks posed by very large online platforms and search engines. It has also been determined that the Consumer Rights Protection Centre will be the competent authority overseeing the application of the Digital Services Act and will perform the functions of the Digital Services Coordinator in Latvia.
Metrological control requirements have been optimized. Amendments to the Law on the Unity of Measurements introduced a new type of metrological control in Latvian legislation—statistical verification. This will not only reduce inconveniences for electricity system users and AS "Sadales tīkls" but will also enable AS "Sadales tīkls" to save approximately €119.4 million between 2026 and 2034. Simultaneously, several related Cabinet of Ministers regulations had to be developed, including regulations on the list of measuring instruments subject to state metrological control and amendments to the Cabinet of Ministers Regulation No. 981 of 5 December 2006 on the re-verification of measuring instruments, verification certificates, and verification marks.
Promoting Competition
Proposals have been prepared to reduce food prices, with the first of them already submitted to the government for consideration—amendments to the Unfair Retail Trade Practices Prohibition Law to eliminate discriminatory practices in pricing food products between those produced in Latvia and other countries, as well as to promote fair trade practices and equal competition in the retail food market.
Amendments to the Competition Law have been approved, assigning a new function to the Competition Council—to provide methodological support to public procurers in identifying, assessing, and calculating damages resulting from competition law violations. At the same time, new amendments to the Competition Law have been prepared to establish liability for market participants’ officials for competition law violations, specifically for breaches related to prohibited agreements. Establishing liability will increase officials' motivation to actively prevent violations or cooperate with the Competition Council in uncovering already committed violations.
Development of Human Capital
To ensure the development of human capital necessary for the labor market, the "Industry-Based Adult Education" support program has been approved. A package of regulatory amendments has also been developed to help entrepreneurs maintain productivity despite labor shortages, including measures for attracting foreign labor.
This year, an evaluation of international experience regarding the most effective support instruments for employee professional development and retraining has been carried out. To expand opportunities for professional development and lifelong retraining, a results-based support instrument (funding model) is needed, including the involvement of private capital, as well as ensuring the accessibility and quality of education.
Amendments to the Immigration Law have been developed and approved, incorporating cases where the Office of Citizenship and Migration Affairs may decide to impose a ban (for up to one year) on a natural or legal person inviting a foreigner. For example, this can apply to all entrepreneurs whose board members are already subject to an invitation ban due to violations of regulatory requirements. Additionally, a delegation has been granted to determine the areas, requirements, and criteria for companies eligible to invite foreigners, whose documents will be accepted, processed, and decided upon within expedited timeframes.
Amendments to Cabinet Regulation No. 225 "Regulations on the Amount of Financial Means Required for Foreigners and the Determination of the Availability of Financial Means" stipulate that if a foreigner receives a visa and the right to employment, the salary must be no less than the average monthly gross wage of those working in the same sector in Latvia in the previous year or the minimum wage established by the sectoral general agreement concluded in accordance with Article 18, Paragraph 4 of the Labor Law. If this is higher, the required amount of financial means is no less than the average monthly gross wage in Latvia in the previous year.
For several years now, the labor market forecasts of the Ministry of Economics have been one of the tools enabling the anticipation of potential mismatches in the labor market. These forecasts reveal possible labor market development trends and risks under the existing education system and education supply structure. Based on labor market forecasts, the Ministry of Economics' 2024 Informative Report on medium- and long-term labor market forecasts until 2040 has been prepared.
Strengthening External Economic Relations
To continue intergovernmental economic dialogue, 2024 saw a series of meetings and visits, including participation from entrepreneurs. These meetings explored opportunities to intensify and diversify Latvia’s cooperation with Germany, France, the United States, Finland, Norway, Japan, South Korea, Ukraine, Moldova, and other countries. Visits by the Minister of Economics and entrepreneurs to Ukraine, the United States, and Germany included the largest business delegations in history (representing more than 110 companies, business organizations, and institutions in total).
In 2024, two intergovernmental commissions on economic, scientific, and technical cooperation (IGC) were organized: the Latvian-Ukrainian IGC session on May 22 in Kyiv and the Latvian-Kazakhstani IGC session on May 16 in Riga. These sessions focused on exploring new opportunities for economic cooperation, discussing significant business environment issues and challenges for entrepreneurs from both sides, and addressing the need to expand the legal framework for cooperation.
SOLVIT - An Alternative Dispute Resolution Tool
To promote the SOLVIT tool and its benefits, the Ministry of Economics reminded Latvian entrepreneurs about SOLVIT’s support options at the "Funding and Support for Business" forum organized by the Ministry, ALTUM, and LIAA. SOLVIT aims to provide quick and practical solutions to issues in the EU Single Market caused by decisions of national authorities that misapply EU legal norms. In cases where an entrepreneur suffers due to unlawful decisions made by authorities in other member states, the SOLVIT center serves as a free problem-solving instrument. In 2024, the Latvian SOLVIT center received 44 complaints (42 from private individuals and 2 from entrepreneurs).
Representation of Latvia’s Interests in EU Matters
Latvia's interests were actively represented in EU matters, including regulations on ecodesign, the EU's open strategic autonomy, the Single Market Emergency Instrument and Resilience Act, the Net Zero Industry Act, and the Critical Raw Materials Act. Efforts were also directed towards the Toy Safety Regulation and the Passenger Mobility Package, with the goal of improving passenger and traveler experiences and strengthening their rights.
Administrative procedures were simplified in two EU Single Market implementation working group projects: improving member states' permitting procedures in the renewable energy sector and addressing discrimination based on IBAN.