Every year, new challenges and factors continue to fuel elevated volatility and uncertainty in financial markets. In 2025, financial markets paid particular attention to geopolitical tensions and regional conflicts, “tariff battles,” the ability of the global economy to sustain growth, and the sustainability of countries’ fiscal policies amid rising defense expenditures. To attract the necessary resources at the lowest possible rates, the Treasury’s borrowing strategy focuses on taking advantage of favorable, relatively calm periods in the markets and avoiding periods of heightened volatility that divert investor attention and reduce their willingness to invest in securities.
By actively monitoring global developments and the financial markets’ response to them, the Treasury in 2025 assessed the most favourable windows for borrowing and, twice during the year, offered Latvian government bonds in international markets. In 2025, the EUR capital market provided lowest interest rates and the opportunity to issue liquid benchmark‑sized government bonds.
In 2025, borrowing in the EUR capital market was conducted in the first and second halves of the year. In May, 7‑year bonds were issued in the amount of EUR 1.0 billion, and in September, 10‑year bonds were issued in the amount of EUR 1.25 billion. As the maturities of the bonds matched investor interest at the time, demand exceeded supply, reaching EUR 2.5 billion in the May issuance and EUR 3.3 billion in the September issuance. As a result, the timing selected by the Treasury and the strong investor demand enabled borrowing on favourable financial terms.
In the coming years, syndicated benchmark bond issuances in the international capital markets will remain the primary borrowing instrument and will account for the largest share of total borrowing volume. The Treasury is preparing for the second issuance of sustainability bonds (the first government sustainability bond was issued in 2021). Maintaining cash reserve, the Treasury will ensure the necessary flexibility in the borrowing strategy with regard to the currency, timing and amount of each new bond issue.
In 2025 Latvia applied for a borrowing opportunity of EUR 3.5 billion under the European Union’s financial instrument SAFE to finance investments in national defence, develop the defence industry, and strengthen the combat capabilities of the National Armed Forces, thereby contributing to the security of the region.
Borrowing opportunities from SAFE, as well as from other international financial institutions (such as European Investment Bank), will be incorporated into the overall borrowing strategy in order to ensure, under favourable conditions, the availability of resources needed to meet overall financing requirements and to strengthen national security in the coming years.
