On 15 July the government approved the Action Plan for Attracting Investment and Access to Finance in the Economy, drawn up by the Ministry of Economics (EM). The plan aims to bring the level of capital attraction closer to that of Lithuania and Estonia by 2029.
As a result, the outstanding balance of loans issued to Latvian non-financial corporations should rise to 17% of GDP (in 2024 it was 14%, or EUR 5.6 billion), while the stock of accumulated foreign direct investment in the equity of Latvian companies should reach EUR 32 billion (in 2024 it was EUR 22.5 billion).
“Attracting foreign capital is a key priority, which is why the Ministry of Economics has defined specific tasks to be completed within set deadlines. We will make sure that the Investment and Development Agency of Latvia, the financial institution ALTUM, the banks and the other institutions involved do as much as possible to achieve the goals we have set,” says Minister for Economics Viktors Valainis.
To achieve what the plan envisages, 15 tasks have been set covering both investment attraction and access to finance. Work on implementing them is now well under way. Among the most significant tasks are preparing a proposal for the creation of an internationally oriented partnership fund that would provide foreign investors with reliable and competent intermediary services for scaling up projects across various sectors in Latvia (a similar concept has been introduced in Denmark), and the establishment of an ALTUM equity fund, drawing in investment from private pension fund managers.
Work on the plan's tasks is proceeding proactively. The government has already approved amendments put forward by the EM to the technology transfer support programme of the Investment and Development Agency of Latvia, which provide support for developing early-stage business ideas in the higher education and research sector and for transferring their technologies to spin-off companies (new companies created by separating off part of an existing company); support for boosting company productivity has been broadened; and the task set out in the plan providing for changes to the pension management remuneration system, to encourage more active investment in Latvia, has been completed — the bill “Amendments to the State Funded Pensions Law” has been passed by the Saeima. Active work is likewise going on to complete plan tasks such as developing a regulatory environment, or sandbox, for the development of innovation and the attraction of new market players. Another important piece of work being carried out to reduce bureaucracy and improve the transparency of the system is the preparation of an assessment for introducing a single supervisory and control body for lenders.
In addition to the above, the following tasks are also to be carried out:
- creating and keeping up to date Latvia's economic profile and investment portfolio offering;
- promoting public-private partnership projects in Latvia;
- securing funding for the development of scalable investment in Latvia;
- developing an ALTUM support co-financing platform for investing in Latvian small and medium-sized enterprises;
- establishing a clear system for the development of corporate bonds;
- assessing the possibility of introducing an export credit insurance model in Latvia.
Latvia is purposefully working to attract investment projects that deliver high value-added products and services, with particular attention to knowledge-intensive bioeconomy, smart energy and mobility, and information and communication technologies.
According to EM estimates, the expenditure needed to implement all the measures is provisionally put at around EUR 270 million, which could result in EUR 2.4 billion of private investment being attracted.
The plan was drawn up in cooperation with the Ministry of Finance and the Bank of Latvia. During its preparation, discussions were held with bank representatives, industry associations, ministries and other institutions.