The goal of the central government debt management is to ensure availability of financial resources for the refinancing of central government debt, central government budget execution and maintenance of the financial resources reserve at the lowest possible costs while hedging financial risks and taking into account the development of the Latvian economy and integration of the domestic financial market into the common financial market of the euro zone.
The Central Government Debt Management Strategy has been prepared on the basis of the following assumptions:
Latvia will continue to implement sustainable fiscal policy in the medium term to ensure the compliance with the basic principles of the fiscal policy for the budget planning stipulated by the Fiscal Discipline Law;
the euro zone will continue its existence and the measures aimed to strengthen the economic and fiscal integration of the euro zone countries will be implemented in the medium term;
the long term credit ratings of Latvia will not be downgraded within the medium term;
- institutional investors’ base in the Latvian domestic financial market will be maintained and broadened in the medium term;
counterparties will offer borrowing and financial risk hedging tools at acceptable terms;
no substantial fluctuations of the central government debt will be caused by loans of ministries and central government institutions, as well as agencies under their control (excluding institutions that are not financed from central government budget or public foundations, special economic zones, ports and free port authorities, but including the derived public persons that are partly financed from central government budget) borrowed outside the Treasury, deposits placed at the Treasury, as well as cash deposits of clients (excluding central government authorities, i.a. social insurance authorities, but including merchants controlled and financed by central government, port and free port authorities and special economic zones) placed at the Treasury and their account balances at the Treasury;
the local governments will continue to borrow mostly through the Treasury over the following years;
- operation and monitoring of the fiscal risk management framework will be ensured in a manner determined by laws and regulations, limiting unpredictable influence of fiscal risks on the fiscal indices.
In order to comply with the best international practice, a distinction has been made within the framework of central government debt management between central government debt portfolio management and central government borrowing management.
Debt Portfolio Management
Debt portfolio management activities and measurements are performed on a daily basis. Analysis of the accumulated information on debt management activities and their efficiency is done on a monthly and an annual basis. Data on fulfilment of the stretegy can be found in Quarterly Bulletin on Debt Management as well as in Annual Report on Government Debt Management.