AGP Executive Report

Consumer Finance Oversight: Latvia’s “quick loan” and other non-bank lending sector topped €1bn in online lending last year, as lawmakers debate moving supervision from PTAC to the Bank of Latvia—progress is slow and may miss the current Saeima window. Riga Energy Governance: Rīgas Siltums is at the centre of a political fight over who should control the district heating utility, with Riga City Council chair Viesturs Kleinbergs arguing for a single owner and backing the municipality over the state. Health Infrastructure Pressure: Stradiņš Hospital warns Riga needs either another emergency care hospital or a non-tertiary facility as queues grow and bed capacity at university hospitals is already stretched. Green Tech for Pollution: P Agro Minerals is developing a phosphorus-recovery water treatment approach using letonite, winning a €10,000 Visa “She’s Next 2026” grant—aimed at cutting fines and returning phosphorus to farms. Export Support for Firms: LIAA and the Ministry of Foreign Affairs report strong demand for practical export help, with 148 Latvian companies taking part in 417 matchmaking consultations across 31 markets. Defence Industry Push: Latvia is sending its biggest-ever delegation—36 companies and institutions—to EUROSATORY 2026, underscoring growing competitiveness in defence and security tech. Tourism Hit by Drone Fears: Guesthouses near the Russian border report cancellations as Ukrainian drone alerts keep tourists away, threatening hundreds of small tourism businesses. EU Policy Watch: The EU Migration Pact took effect, shifting focus toward border control and return mechanisms while testing how member states balance capacity and humanitarian commitments. Business Digital Presence: A new EU comparison shows Latvia in the middle of the pack for enterprise social media use (57.2%), with larger firms far more active than small ones.

Latvia-Ukraine Defence Ties: President Volodymyr Zelensky met Latvia’s Defence Minister Raivis Melnis to push ahead on the Drone Deal, share counter-drone know-how, and discuss SAFE joint weapons financing and EU/NATO cooperation. Local Business Export Support: LIAA and the Ministry of Foreign Affairs ran a matchmaking event with 148 Latvian firms, delivering 417 consultations across 31 markets—slots fully booked, showing strong demand for practical export guidance. Fintech Regulation: Latvijas Banka issued a licence to SIA Fibonatix (LV) to operate as a payment institution, adding another player to Latvia’s payments landscape. Tourism Under Security Pressure: In Latvia’s Land of Blue Lakes, guesthouses are reporting empty rooms as tourists avoid the region over fear of stray Ukrainian drones, threatening hundreds of small tourism businesses. OECD Outlook for Latvia: The OECD says Latvia’s living standards are converging toward the OECD average, but calls for better public spending efficiency, stronger administration, improved health outcomes, and faster green transition. Energy Investment (Regional): Estonia’s Sunly is building a €100m hybrid energy park in Latvia (54MW) with battery storage, financed partly by bond investors and banks. Aviation Upgrade: airBaltic won APEX “Best Wi‑Fi in Europe” for 2026, citing passenger feedback and free Starlink onboard internet.

Latvia-Ukraine Defence Ties: President Zelensky met Latvian Defence Minister Raivis Melnis to push ahead the Drone Deal and SAFE joint weapons financing, with both sides stressing counter-drone know-how and EU/NATO coordination. Latvian Defence Exports: Latvia is sending its biggest-ever delegation to EUROSATORY 2026 in Paris, with 36 companies and institutions coordinated by LIAA and DAIF Latvia, as Europe ramps up defence tech spending. Export Support for Firms: During Economic Representatives Week, 148 Latvian companies booked 417 consultations across 31 markets via LIAA and the Foreign Ministry, showing strong demand for practical export guidance. Tourism Hit by Drone Fears: In Latvia’s “Land of Blue Lakes,” guesthouses report empty rooms as Ukrainian drone alerts deter visitors, putting hundreds of tourism-linked small businesses under pressure. Payments & Banking: Latvijas Banka issued a licence to SIA Fibonatix (LV) to operate as a payment institution, adding another player to Latvia’s fintech landscape. airBaltic Customer Experience: airBaltic won APEX “Best Wi‑Fi in Europe 2026” based on passenger ratings, highlighting its free Starlink onboard service. Macroeconomic Outlook: The OECD’s Latvia survey points to modest growth and urges efficiency in public spending, stronger administration, better health outcomes, and faster green transition to sustain convergence. EU Trade Rules: The EU is moving toward tariff waivers for some US goods (with safeguards and a sunset clause to end in 2029 unless extended), after EU Parliament approval and Council sign-off.

Latvia-Ukraine Defence Ties: President Zelensky met Latvia’s Defence Minister Raivis Melnis to push ahead the newly signed Drone Deal, including sharing counter-drone know-how and discussing joint projects under the EU SAFE financing programme. EU Trade & Tariffs: The EU is set to approve a deal that would cut most tariffs on selected US goods, with safeguards for European producers and a “sunset” of tariff preferences until end-2029. Counter-Drone Pressure on Tourism: In eastern Latvia’s “Land of Blue Lakes,” guesthouses report empty rooms as tourists cancel over fear of stray Ukrainian drones, putting hundreds of small tourism businesses under strain. Latvian Business & Policy Outlook: The OECD says Latvia’s living standards are converging toward the OECD average, but urges better public spending efficiency, stronger administration, improved health outcomes and faster green transition. Finance & Payments: Latvijas Banka issued a licence to SIA Fibonatix (LV) to operate as a payment institution. Transport & Consumer Impact: EU passenger-rights reform is contested: airlines say the final text backs their approach, while Spain’s consumer ministry argues it is not ambitious enough. Aviation Branding: airBaltic won APEX “Best Wi‑Fi in Europe” for 2026, highlighting free Starlink onboard internet. Riga Construction Bottleneck: A LaSER think tank says Riga’s building process is fragmented across multiple departments, slowing development compared with Helsinki.

Latvia-Ukraine Defence Ties: President Volodymyr Zelensky met Latvian Defence Minister Raivis Melnis to push ahead on the Ukraine–Latvia Drone Deal, including sharing counter-drone experience and discussing joint projects under the EU SAFE financing programme. EU Fiscal Flexibility: The EU Council activated the national escape clause for Spain and approved similar requests for 17 states, including Latvia, allowing temporary room for higher defence spending without breaking debt-sustainability rules. Latvian Finance Regulation: Latvijas Banka issued a licence to SIA Fibonatix (LV) to operate as a payment institution, adding to Latvia’s growing roster of licensed payment and e-money providers. Trade & Logistics: Ocean Network Express launched a new weekly Riga route (Iberia Baltic Express), improving direct cargo links between Latvia and Portuguese ports plus wider European connections. Border & Migration Pressure: Latvia’s Interior Minister Jānis Dombrava called for stricter procedures to identify and deport illegal border crossers who then claim asylum, citing overcrowded asylum centres and security concerns. OECD Outlook for Latvia: The OECD said Latvia is converging toward OECD living standards but urged action on public finance efficiency, stronger administration, better health outcomes and faster green transition. Construction Pace Watch: A LaSER think tank review found Riga’s building process is fragmented across multiple departments, slowing development compared with more integrated models like Helsinki. airBaltic Customer Experience: airBaltic won APEX’s Best Wi‑Fi in Europe for 2026, citing passenger ratings and its free Starlink service. Labour Market Signal: Eurostat data showed Latvia’s employment rate fell the most among EU states in Q1 2026 (down 0.8 pp), while several countries posted gains. Drone Testing in the Region: Finland tested interceptor drones including Destinus’ Hornet Block 1 and Latvian Origin Robotics’ Blaze, highlighting growing regional demand for counter-drone systems. Aviation Labour Reform Push: The European Cockpit Association plans to urge regulators to close a labour loophole used via outsourcing agencies in wet-lease arrangements, pointing to fallout from SmartLynx’s collapse.

Aviation & Consumer Rights: Airlines say the EU has backed their line on passenger-rights reform, keeping delay compensation thresholds and blocking extra charges for families—while Spain’s consumer ministry argues the deal is too weak because it drops the right to free hand-luggage boarding. Latvia Economy Outlook: The OECD says Latvia is converging toward the OECD average, but urges better public spending efficiency, stronger administration, improved health outcomes and faster green transition; it flags a widening fiscal deficit. Labour Market: Eurostat reports Latvia saw the biggest employment-rate drop in the EU in Q1 2026 (-0.8pp), while Cyprus led gains (+0.4pp). Defence & Drones: Ukraine and Latvia discussed the Drone Deal and joint SAFE-funded defence projects; meanwhile, a “kill zone” concept is expanding along Ukraine’s front as drone threats intensify. Transport & Trade: Ocean Network Express launched a new weekly Riga route linking Portugal and Baltic ports, aiming to speed access for exporters. Finance: Latvijas Banka licensed SIA Fibonatix (LV) as a payment institution. Business & Cities: A LaSER think-tank study says Riga’s construction pace is held back by fragmented planning and multiple departments. Aviation Jobs Pressure: The European Cockpit Association plans to push regulators to close a labour loophole highlighted by SmartLynx’s collapse. Border Policy: Latvia is moving to strengthen border procedures and deportation steps for illegal crossings that claim asylum.

Latvian Politics: The Saeima restored parliamentary mandates for former PM Evika Siliņa and former Justice Minister Inese Lībiņa-Egnere, and reinstated Kaspars Melnis, while also reshuffling committee seats—setting up Siliņa’s likely role in the European Affairs Committee. Animal Welfare & Food Industry: Lawmakers rejected first-reading amendments that would have phased out cage-raised laying hens, despite debate and a protest outside parliament. Defense & Security: Latvia’s drone-focused summit coverage highlights a broader NATO push for “usable capabilities today,” as Ukraine offers low-cost drone-killing tech and training to Nordic and Baltic allies; separately, Lockheed warned Patriot interceptor delivery timelines remain uncertain. Energy & Markets: Eurogroup discussions linked energy security and economic resilience, while a new report ranks Europe’s highest and lowest residential electricity prices—showing how policy and infrastructure drive household costs. Banking & Households: Swedbank data finds 92% of Latvians report financial stress, with inflation and healthcare costs topping the list. Business Deals: Brīvais vilnis bought Estonian fish processor Saare Kala Tootmine, and Balticovo opened a €120m cage-free egg production complex in Iecava. Travel & Consumer: Latvia’s residents spent €528m on domestic trips in 2025, with Riga remaining the top destination. Scams: Authorities warn of phone scams impersonating the State Social Insurance Agency to lure pension-related victims.

Defense & Deterrence: Ukraine and Latvia deepen defense ties with a landmark drone deal, while NATO allies keep pushing for faster, “good enough” weapons that can be produced and delivered at scale; separate reporting also highlights drone-related airspace incidents across the region. Energy & Infrastructure: Klaipėda LNG terminal in Lithuania locks in long-term regasification capacity through 2044, with bookings from Latvenergo and Latvian-linked interests among others, underlining Baltic energy security planning. Banking & Business Finance: Ardshinbank again becomes flagship sponsor of the EBRD Annual Meeting and Business Forum in Riga, spotlighting investment and resilience themes for the region. Consumer & Household Costs: The ECB raises rates by 0.25%, adding pressure to mortgage holders as Latvian residents report widespread financial stress in a Swedbank survey. Local Economy & Deals: Latvian company Brīvais vilnis buys Estonian fish processor Saare Kala Tootmine, part of PRFoods’ debt restructuring plan. Agri-Food & Trade: Armenia appeals to the Eurasian Economic Commission over Russia import restrictions hitting Armenian fruit, wine and other goods, while Latvia also flags unauthorized GMO tomato seedlings. Tourism: Latvian residents spent about EUR 528m on domestic trips in 2025, with Riga region the top destination by average daily spend. Industry & Growth: Balticovo opens a new egg production complex in Iecava after a EUR 120m investment, boosting cage-free capacity. Weather Watch: Latvia issues severe thunderstorm warnings, with heavy downpours and hail risk expected.

Public Health & Compliance: Latvia’s Plant Protection Service found unauthorised GMO “Norfolk Purple” tomato seedlings and ordered destruction, highlighting EU-wide limits on GMO circulation. Agri-Business: Balticovo opened a €120m egg production complex in Iecava, adding cage-free capacity and a year-round egg transport system. Retail & Infrastructure: Riga Central Market’s meat pavilion was ordered to close immediately after a State Construction Control Bureau inspection, with the city council set to fund roof reinforcement. Weather & Risk: Latvia issued yellow and orange warnings for severe thunderstorms, heavy downpours, strong gusts and hail risk. Tourism Pressure: Eastern Latvia’s Blue Lakes region is seeing booking cancellations as visitors fear stray Ukrainian drones, squeezing hundreds of small tourism businesses. Defense & Tech Cooperation: Latvia signed a drone cooperation deal with Ukraine, while NATO allies continue pushing for better counter-drone capabilities. Regional Security Context: A coalition including Latvia condemned Iran’s “lethal plotting” and malign actions across Europe and beyond. Business Finance: Eleving Group will pay EUR 4.29m in dividends to shareholders, continuing its semi-annual payout policy.

Port & Transit Watch: Latvia’s Economy Minister met stevedoring firms to push port competitiveness, discuss governance reform and investment, and weigh extending a reduced diesel excise tax as diesel prices stay elevated. Defense Industry Deals: Ammunity (Latvia) signed a letter of intent with Poland’s Mesko to strengthen ammunition supply-chain resilience across the Baltic-Nordic region. Drone Security Cooperation: Latvia signed a drone agreement with Ukraine during the Nordic-Baltic summit in Tallinn, while Estonia opted for a declaration without a drone deal; Zelenskyy said Ukraine can share low-cost interceptor know-how and training. EU Sanctions Direction: The European Commission proposed a new Russia sanctions package including an entry ban for Russian military personnel since 2022, plus further curbs on industrial sectors, banking and crypto assets. Local Market Regulation: Riga Central Market’s meat pavilion was ordered to close immediately after a State Construction Control Bureau inspection flagged technical issues. Capital Markets: LAU Infra Group kicked off Latvia’s first IPO of a state-owned company, offering shares at €1.57 (subscription June 10–19). Energy & Infrastructure Finance: EBRD and Morocco’s ONEE agreed a €250m financing programme for drinking-water production modernisation, signed during EBRD annual meetings in Riga. Corporate Returns: Eleving Group will pay €4.29m in dividends for H2 2025.

Latvia-Ukraine Defense: Latvia and Ukraine signed a new Drone Deal in Tallinn, focused on drone production, air defense and missile defense cooperation, plus technology and experience exchange to strengthen Latvia’s protection against drone threats. Nordic-Baltic Summit: At the same Tallinn gathering, Nordic and Baltic governments backed Ukraine’s swift EU accession while stressing Russia as the main Euro-Atlantic threat and pledging higher defense investment. Local Economy & Trade: Latvia’s foreign trade turnover rose 12.6% year-on-year in April to €4.13bn, with exports up 13.9% and imports up 11.4%, improving the trade balance. EU Sanctions Push: The European Commission outlined a new Russia sanctions package, including a proposal to ban entry for Russian military servicepeople involved since the 2022 invasion and further curbs on sectors and the “shadow fleet.” Payments & Fintech: DECTA was named in The Payments Power 50 2026, highlighting its end-to-end payments platform and €1bn+ annual transaction volume. Business Tech Expansion: Microshare added 31 languages to its EverSmart™ Pest and Clean AI tools, aiming to speed adoption for multilingual customers in Europe and Asia. Aviation Connectivity: Wizz Air plans to roll out Starlink onboard connectivity across its A320 fleet in 2027, joining airlines already using the service. Tourism Under Pressure: Reuters reports drone alerts are hurting tourism in Latvia’s Land of Blue Lakes, with cancellations affecting hundreds of small businesses near the Russian border.

Latvia-Ukraine Defense: In Tallinn, Latvia and Ukraine signed a new Drone Deal to deepen defense cooperation, including sharing Ukraine’s drone and air-defense know-how and supporting joint production and an integrated air-defense system. Nordic-Baltic EU Push: Nordic and Baltic governments backed Ukraine’s swift EU accession at a summit in Tallinn, tying it to Euro-Atlantic security and pledging higher defense investment. EU Sanctions Plan: The European Commission proposed a new Russia sanctions package, including an entry ban for Russian military personnel who served since the 2022 invasion, plus further curbs on sectors, banking, crypto assets and the “shadow fleet.” Latvia Economy Watch: Latvia’s inflation accelerated in May to 3.5% year-on-year, driven mainly by housing/utilities and services like restaurants and accommodation. Telecom Deal Scrutiny: Latvia’s PM says he’s awaiting more information from the economy minister on Telia’s planned share acquisitions of LMT and Tet, with advisers including J.P. Morgan. Payments & Fintech: DECTA was named to The Payments Power 50 2026 for end-to-end payments, citing over €1bn in annual transaction volume. Energy Storage: Rolls-Royce and Sunly advanced Latvia battery storage plans, while other regional BESS supply deals highlight growing demand for grid-scale storage. Rail Baltica Risk: Latvia’s Rail Baltica schedule and financing sustainability were discussed in Estonia’s anti-corruption committee, with attention on whether decisions stay on track for completion by 2030.

Latvia’s Telecom Push: LMT plans to invest EUR 38 mln in network upgrades in 2026, adding 10 new base stations and upgrading more than 200, while continuing work on 5G Standalone in commercial mode. Public Media Tech Upgrade: Redge Technologies will build a new unified audio and video streaming platform for Latvian Public Service Media, a EUR 2.6 mln deal over 3.5 years aimed at easier access across web, mobile and smart TVs. Cross-Border Tax Cooperation: Latvia’s State Revenue Service signed memorandums with Ukraine and Lithuania to align tax rules with EU standards, share digital service know-how, and fight the shadow economy, including VAT-gap reduction. E-commerce Sanctions Enforcement: Latvia’s regulator NEPLP ordered access restrictions to Wildberries.ru and several other Russian sites, citing content linked to Russia’s war and annexation narratives, with ISP blocks and a one-month appeal window. Regional Business Investment: Agrova Baltics is investing EUR 30 mln in Alūksne to expand egg production capacity by 56% to about 280 mln eggs per year, with new laying hen houses and upgrades to grading and packing. Aviation Connectivity: Wizz Air signed a Starlink satellite internet agreement to equip its fleet from 2027, joining airBaltic and other European carriers already rolling out the service.

Latvia’s Telecom Push: LMT plans to invest EUR 38 mln in 2026 to upgrade network infrastructure, adding 10 new base stations and upgrading more than 200, while continuing 5G Standalone development. Public Media Tech Upgrade: Redge Technologies will build a unified audio and video streaming platform for Latvian Public Service Media in a EUR 2.6 mln deal over 3.5 years, with first features expected by year-end. Cross-Border Capital Markets: Riga hosted progress on a single Baltic capital market concept, with EBRD support aimed at deeper integration and better access to finance for firms, including SMEs. Trade & Security: Latvia is tightening enforcement against illicit cigarettes by targeting equipment suppliers and supply routes, as border detections fall but illegal volumes rise. EU Policy Fight: Nine EU governments including Latvia oppose a Brussels plan to impose electric-vehicle quotas on large corporate fleets, arguing uneven readiness could hurt competitiveness. Jobs Snapshot: Latvia reported 2.2% of positions vacant in Q1 2026, with vacancies down year-on-year. Aviation & Tourism: Tallink’s Romantika returns to the Tallinn–Stockholm route from 2 July, adding weekend sailings and summer entertainment cruises.

Fertilizer & trade security: A new warning flags how fertilizer disruptions could hit food security and keep feeding Russia’s war economy, with Latvia urged to watch transit and supply-chain shifts closely. Rīga school catering procurement: Rīga City Council amended school and kindergarten catering rules after challenges over “green” criteria, after complaints that the wording didn’t guarantee organic/local suppliers would actually deliver. eID microchip snag: Latvia’s eID electronic signature use is set to be affected for 346,456 people after a French chip certification expiry; a six-month extension runs to Dec 9, but the issue is still unresolved. Underwater infrastructure defence: Latvia joined a 17-country initiative launched in Singapore to protect critical underwater cables and energy links, aiming for shared principles and cooperation. EU policy & visas: 11 EU countries, including Latvia, pushed the European Commission for tighter Schengen visa rules for Russians, citing rising tourist visas and loopholes. EBRD in Riga: The EBRD annual meeting in Riga focused on resilience, green/digital transformation and conflict-affected economies, with Latvia-linked regional finance cooperation also highlighted. Latvia-Russia pharma exports: Latvia’s pharmaceutical exports to Russia remain significant, with industry saying reorientation takes time and that pharma is not broadly sanctioned.

EBRD in Riga: The European Bank for Reconstruction and Development used its annual governors’ meeting to push conflict-affected recovery and resilience, with Azerbaijan’s first deputy economy minister backing longer-term rebuilding that also revitalises private business. Pan-Baltic finance push: The EBRD also signed a memorandum with Estonia, Latvia and Lithuania to deepen a unified regional capital market and aim for higher MSCI Emerging Market status. Armenia funding boost: Ameriabank and FMO agreed a EUR 120m loan facility to expand MSME lending in Armenia, with at least 25% earmarked for green projects and a focus on women, young entrepreneurs and rural/agri firms. Latvia pharma exports to Russia: Latvia’s pharmaceutical exports to Russia have fallen from EUR 94.5m (2021) to about EUR 76m last year, with industry linking growth mainly to Russian inflation and price changes rather than new product expansion. Energy storage debate: Baltic energy experts warned that solar-driven near-zero prices can hurt project payback unless storage (BESS) and new demand, including data centres, scale up. Migration politics: Latvia said it will not accept migrants under the EU solidarity mechanism, choosing alternative support as a new framework takes effect on June 12. Visa pressure on Russians: 11 EU countries, including Latvia, urged stricter Schengen visa rules for Russians, citing high tourist visa issuance despite the war in Ukraine.