AGP Executive Report

airBaltic Financing Crunch: Latvia’s state-backed airline is seeking short-term “interim financing” from bondholders at an Aug 3 meeting to avoid default risk as debt pressure mounts. EU Legal Pressure: The European Commission has launched infringement proceedings against Latvia and 23 other countries over incomplete transposition of the internal market emergency rules (IMERA package), giving member states two months to respond. Riga Infrastructure Update: Construction firm BERERIX has completed major facade and glazed-roof works on the southern section of the new Riga Central Station, with full building completion targeted by end-August 2026. Business Expansion in Riga: NORDSPACE secured EUR 1.2m from Signet Bank for a second phase of smart storage facilities at Jūrkalnes Street 62, adding new space for work and entrepreneurship. Local Economy & Policy: Latvia’s National Alliance proposes merging three ministries into a new Ministry of the Economy to speed decisions and reduce overlapping responsibilities. Regional Security Angle: Lithuania and Latvia are warning of possible Russian targeted sabotage against critical infrastructure, while Russia dismisses the claims as “scare stories.”

airBaltic Financing Crunch: Latvia’s state-backed airline is seeking short-term “interim financing” from bondholders at an Aug. 3 meeting as debt risks mount and default fears rise. EU Legal Pressure: The European Commission has launched infringement proceedings against Latvia and 23 other countries for not fully transposing an internal market emergency directive, giving member states two months to respond. Digital Euro Pilot: The ECB has selected 36 payment service providers for the digital euro pilot starting in the second half of 2027, with Latvia among the ecosystem watching closely as banks and non-banks prepare. Riga Infrastructure Disruption: Vanšu Bridge renovation could mean a full closure to private cars, with “park and ride” and extra public transport routes being considered to ease peak-hour congestion. Local Business Expansion: LIDO founder Gunārs Ķirsons is investing about EUR 4.5m to launch the DABA fast-casual restaurant concept in Riga, with two sites planned for late July and November. Sports Funding Fight: Nine EU countries including Latvia are urging cuts to funding for sports bodies such as the IOC and World Aquatics over the return of Russian and Belarusian athletes. Defense & Drones Backdrop: Latvia is also in the NATO security narrative as Baltic leaders warn of possible Russian targeted sabotage on critical infrastructure, while Europe’s drone spending accelerates.

Digital Euro Push: The ECB has selected 36 payment service providers across 19 countries to take part in the digital euro pilot, due to start in the second half of 2027 and run for 12 months, with banks and non-bank firms including Revolut and Deutsche Bank among the chosen. Telecom Deal Scrutiny: Latvia’s PM Andris Kulbergs says the proposed buyout of shares in LMT and Tet is still not “ready,” demanding an “easy-to-understand explanation” and more assurances on transparency and national-interest risks. Dual-Use Exports: Rēzekne will host the second Latvian Dual-Use Export Forum on 7 September, aiming to connect over 170 industry players across Europe and beyond in civilian and defence tech. Food & Exports: Latvia’s berry exports are gaining momentum, with frozen blackcurrants hitting a record value above €860,000 last year, led by demand from the Netherlands, Austria, Germany and Italy. Regional Business & Investment: Digmatix, a Latvia-based Microsoft Business Applications provider, is entering Romania via the acquisition of Elian Solutions. Policy on Belarus/Russia Goods: Latvia plans to ban imports of certain books, toys and other items produced in Belarus and Russia, while allowing transit through Latvia. Sports Funding Pressure: Nine EU states, including Latvia, are urging the EU to cut funding to sports bodies such as the IOC over the return of Russian and Belarusian athletes.

Digital Euro Rollout: The ECB has selected 36 payment service providers for the digital euro pilot, set to start in the second half of 2027 for 12 months, with Latvia included among the participating euro-area firms. EU Sports Funding Pressure: Nine EU countries, including Latvia, are urging the European Commission to cut EU funding for sports bodies such as the IOC after Russia and Belarus athletes were readmitted. Latvia Telecom Deal Watch: Latvia is in talks with 23 potential investors as it prepares the landmark acquisition of Telia’s stakes in LMT and Tet, with due diligence and security screening under way. Food Compliance: Latvia’s Food and Veterinary Service stepped up checks after cases of strawberries being marketed as locally grown during the season, with fines possible for false origin claims. Rail Safety Tragedy: The remains of a Latvian Railways employee missing after falling into the Daugava were found on Zaķusala island; the State Labour Inspectorate is investigating workplace safety. Defense Cooperation: Estonia and Ukraine have begun implementing a drone deal, with knowledge-sharing and joint production elements highlighted. Regional Security Drills: Sea Breeze naval exercise kicked off in the UK with over 20 countries, including Latvia, focusing on mine countermeasure operations.

Latvia Telecom Deal: Latvia is lining up 23 investors for a landmark acquisition of Telia’s stakes in LMT and Tet, with due diligence and security screening under way and valuations being finalised before binding offers. Digital Payments: The ECB has selected 36 payment service providers for the digital euro pilot, due to start in the second half of 2027 for 12 months, to test technical operations and refine the user experience for citizens and businesses. Riga Airport Governance: Normunds Feierbergs has been confirmed to the board of RIX Riga International Airport, taking responsibility for strategic finance and information technology management. Energy Efficiency in Property: Origo says its AI-based building management system has cut energy-related costs by over €132,000 and reduced energy use and CO₂ emissions. Defense Budget Pressure: Latvia’s Finance Ministry estimates extra funding needs to reach 5% of GDP defence spending, projecting rising annual gaps from 2027 through 2030. Cyber & Sanctions: The EU and UK imposed sanctions tied to a long-running Russian cyberespionage and sabotage campaign targeting critical infrastructure across Europe. Tourism Tax Debate: Pärnu and local authorities back a tourist tax, while Tallinn argues it could hurt tourism. Sustainability Watch: Textile waste is flagged as a growing problem in Latvia, with recycling still lagging behind fast-fashion consumption. Crypto Compliance: A MiCA-licensed exchange survey says many EU users don’t know if their exchange is compliant after the July 1 deadline. Geopolitics: China rejects a 14-country reaffirmation of the 2016 South China Sea arbitration ruling, while the EU calls for a legally binding ASEAN-China code of conduct.

EU Sanctions & Cybersecurity: The EU and UK imposed fresh sanctions on Russian military intelligence officers, hackers and entities tied to a yearslong cyberespionage and sabotage campaign targeting critical infrastructure across Europe. Latvia Security & Governance: Latvia’s Culture Ministry suspended EU funding for a women’s NGO cooperation project after an audit flagged unclear participant selection, non-transparent expenses and weak training documentation. Defense Budget Pressure: Latvia’s Finance Ministry says reaching 5% of GDP defense spending will require major new budget money—rising from €92.1m (2027) to over €1.12bn by 2030—warning that current tools could worsen inequality. Cross-Border Sanctions Evasion: A Lithuanian investigation alleges Starlink terminals and drone-related engines were shipped to Russia via the Latvian border using false declarations. Business & Markets: Paybis reports that 68.6% of European crypto users don’t know if their exchange is MiCA-compliant after the 1 July deadline. Energy & Assets: Latvia’s state forest manager LVM bought nearly 5,000 hectares in Latgale from Swedish owners for €26.385m. Aviation & Infrastructure: RIX Riga Airport confirmed Normunds Feierbergs to its board for strategic finance and IT management. Trade & Networking: Latvia hosts the 12th meeting of honorary consuls, with a business networking event bringing 90+ consuls from 44 countries to Riga. Startup Spotlight: CarrierTrust launched an EU-focused reputation network for transport and logistics firms to assess partners before cooperation.

Forest & State Assets: Latvia’s state forestry firm LVM has bought almost 5,000 hectares of forest land in Pasienes parish, Ludza region, from Swedish owners for just over €26m, adding about 4,800 hectares of forest to strengthen long-term wood supply. EU Regulation Watch: New packaging and packaging-waste rules take effect on Aug 12, expanding what counts as packaging (including tea bags and mascara brushes) and tightening requirements on recycling, reuse and “substances of concern.” Energy & Weather Disruption: Severe thunderstorms hit eastern and southeastern Latvia, damaging the power grid and leaving up to 9,300 customers without electricity, with about 2,400 still out by evening as crews restore lines. Geopolitics With a Baltic Link: Latvia is among 14 countries and the EU reaffirming the 2016 South China Sea arbitration ruling as final and legally binding, while China rejects it and summons Japan’s envoy. Defence Finance: Romania has joined the founding group behind Canada-led plans for a Defence, Security and Resilience Bank, announced alongside NATO Summit talks that also include Latvia.

Severe Weather Disruption: Severe thunderstorms hit eastern and southeastern Latvia, knocking out power for up to 9,300 customers at peak and leaving about 2,400 still without electricity by Sunday evening as Sadales tikls worked to restore supply after lightning strikes and trees falling onto overhead lines. Energy Market Investment: Futureal Energy Partners bought two battery energy storage projects in Riga from Aretis Group—Bolderaja and Bisuciems—for a combined 45 MW/120 MWh—aiming to start construction in July and reach commercial operations in November. Science & Health Research: A €1.2m international project led by Aston University is exploring “magnetobots” made from magnetotactic bacteria to deliver targeted cancer therapies, using external magnetic fields to guide treatment to tumors. Geopolitics (Latvia in the mix): Latvia joined 13 other countries and the EU in reaffirming the 2016 South China Sea arbitration ruling as final and legally binding, while China rejected the decision and called it null and void.

South China Sea Diplomacy: The Philippines and 13 partners, including Latvia, reaffirmed on the 10th anniversary of the 2016 Hague arbitration that China’s expansive South China Sea claims have “no legal basis,” calling the award “final, legally binding and definitive,” while rejecting “destabilising” actions and urging disputes be handled under UNCLOS. Baltic Energy Integration: Lithuania’s energy-grid push highlights how Latvia and Estonia also ended dependence on Russian and Belarusian electricity systems, fully syncing into the EU market via the Continental Europe Synchronous Area. Food Policy & Trade: Estonia’s cage-free egg pledge faces pushback as producers argue a unilateral ban would simply shift demand to cheaper Latvian and Lithuanian cage eggs, even as some companies invest in barn-hen production. Baltic Diplomacy: Latvia, Estonia and Lithuania rejected Russian claims about drone use of their airspace, stressing the drones are linked to Russia’s war against Ukraine. Travel Rules: The US kept visa-free entry for citizens of 42 countries under ESTA, while China published a list of 35 European countries eligible for short visa-free visits, including Latvia.

Latvia Telecom Deal Watch: The Latvian government is in advanced talks with 23 potential investors about buying Telia’s LMT and Tet shares, with binding offers expected after due diligence and security checks. Trade Data: Latvia’s foreign trade turnover rose to €3.86bn in May (+8.4% y/y), but the trade deficit widened to €374m as imports grew faster than exports. EU Money & Rules: The EU approved Hungary’s €10bn recovery plan and also backed targeted amendments to several countries’ plans, including Latvia’s. Baltic Security Diplomacy: Latvia, Estonia and Lithuania rejected Russia’s claims about opening airspace for drone strikes, saying any drone incursions stem from Russia’s war against Ukraine. Global Mobility: China published a visa-free list for 35 European countries that includes Latvia, while the US and Canada expanded their visa-free entry guidance for eligible travellers. Business & Tech: Latvia’s central bank issued three licences to two fintech companies, while new AI and legal-tech initiatives abroad highlight growing demand for AI tools that can be trusted.

Latvia Telecom Deal Talks: Latvia’s government is in advanced talks with 23 potential investors about buying Telia’s LMT and Tet shares, with binding offers expected after due diligence and security checks. EU Recovery Funding: Ecofin approved revised recovery and resilience plans for Latvia and other states, while Hungary’s new €10bn plan clears the way for performance-based EU payouts. Latvia Trade Update: Latvia’s foreign trade turnover rose in May, but the trade deficit widened as imports grew faster than exports. Latvian Finance & Crypto: Latvijas Banka issued three licences to two fintech firms, including authorisation for crypto-asset services and an electronic money institution. Data Protection Pressure: A conference on GDPR implementation highlighted rising compliance expectations for businesses across Europe. NATO & Defence Industry: NATO summit fallout keeps driving procurement and financing themes, including a Canada-led defence bank initiative where Türkiye opted out for now, and broader moves toward shared defence capabilities. Regional Security Tech: XTEND secured a U.S. patent for drone autonomy, reinforcing the tech race behind defence and public safety systems.

Telecom Dealmaking: Latvia’s government is in advanced talks with 23 potential investors over the planned acquisition of Telia’s LMT and Tet shares, with binding offers expected after due diligence and security checks. EU Recovery Funding: Ecofin approved revised recovery and resilience plans for several states including Latvia, while Hungary’s new €10bn plan cleared the same hurdle. NATO Procurement Push: NATO allies moved to replace aging AWACS with up to 10 Saab GlobalEye aircraft, with Latvia among the core buyers, as the alliance also weighs new defense financing models. Defense Finance Bank Update: Türkiye has opted out for now of Canada-led Defense, Security and Resilience Bank plans, despite a July declaration that included Latvia. Latvia Trade Watch: Latvia’s foreign trade turnover rose in May, but the trade deficit widened as imports grew faster than exports. Riga Housing Costs: Riga will start collecting management fees for municipality-owned apartments from July, likely lifting bills for residents, including social housing tenants. Data Protection: Business compliance demands are rising as GDPR implementation know-how spreads, with Latvia-linked attention on practical enforcement culture. Regional Transport: Latvia’s regional bus network is set to stay at roughly the same scale in 2027 while authorities refine funding and optimization plans. Market Signals: South Korea and Taiwan drove a major emerging-market equity outflow in June, while debt flows held up better than stocks.

Latvia’s Budget Outlook: The Finance Ministry cut Latvia’s 2026–27 growth forecasts to 2.0% for both years and lifted inflation projections, warning of wider budget deficits and a negative medium-term fiscal space. airBaltic Watch: Fitch put airBaltic and its secured bonds on Negative Rating Watch, citing weakening liquidity and higher default risk without more external support. Defence Finance Push: Canada’s NATO summit push for a Defence, Security and Resilience Bank gained Latvia among the founding backers, aiming to raise up to $134bn for defence and security financing at lower cost. NATO Procurement for Latvia: NATO plans to jointly buy up to 10 Saab GlobalEye radar aircraft, with Latvia among the participating countries. Public Transport Planning: Latvia’s transport authority says the 2027 regional bus network is likely to stay at today’s scale while it reviews cost-saving options. Fuel Retail Deal: Virši completed the takeover of 17 former Astarte service stations, expanding its network to 101 sites. Healthcare Safety: Latvia’s ambulance crews have been equipped with body armour and helmets as part of crisis preparedness upgrades. Cyber Risk in State Firms: LVM is still restoring IT services weeks after a ransomware attack disrupted systems for customers and contractors. Visa Moves: Japan confirmed visa-free entry for 74 countries and regions, while China published a list of 50 nations eligible for unilateral visa-free entry. Consumer Tech Regulation: Nintendo says Europe’s Switch 2 will get a user-replaceable battery to comply with the EU batteries rules.

Latvia Macro Outlook: Latvia’s Finance Ministry cut growth forecasts for 2026-27 to 2% and 2%, raised inflation to 3.6% (2026) and 3.3% (2027), and warned of wider budget deficits and negative fiscal space. airBaltic Under Pressure: Fitch put airBaltic and its secured bonds on Negative Rating Watch, citing liquidity strain and a higher risk of a distressed debt restructuring without more external support; meanwhile the PM says the airline can’t operate without ongoing state funding and wants a new business plan. NATO & Defence Finance: At the Ankara NATO summit, Latvia highlighted drones, counter-drone and air defence priorities; allies pledged at least $140bn for Ukraine, while Canada-led partners including Latvia backed a Defence, Security and Resilience Bank to raise up to $134bn for rearmament and security projects. EU Capital Markets: Eurogroup ministers will keep studying Spain’s plan for a European safe asset despite long-running disagreements. Local Business & Economy: Latvia’s unified university admissions start on July 9; Riga’s Dzirnavu street works bring traffic closures; and Latvia’s state forestry firm LVM says it’s still restoring IT services after a ransomware attack. Cyber & Security: Latvia’s Prosecutor General warns corruption cases are hard to detect due to a shortage of undercover operational staff. Trade & Compliance: Latvia-linked smuggling cases include a court case over Starlink kits allegedly shipped to support Russia’s war.

NATO Summit Fallout for Latvia: At the Ankara meeting, NATO leaders reaffirmed Article 5 and pledged at least $140bn in military aid for Ukraine, while pushing faster drone, counter-drone and air-defence build-up—Latvia also flagged Russia’s hybrid tactics and shadow fleet risks. Patriot Tech Shift: Trump said the US will license Ukraine to manufacture Patriot air-defence systems, a major boost for Kyiv’s missile defence needs. Canada’s Eastern Flank Move: Canada will deepen its NATO role in Latvia, extending forces until 2031 and raising its contingent to about 2,600 troops, plus more defence procurement and industrial cooperation. airBaltic Pressure Point: Latvia’s PM said airBaltic can’t operate without continued state funding and demanded a new business plan before further support; two A220-300 jets were returned early, leaving the fleet at 54. Rail Upgrade Troubles: Latvia’s railway platform modernization is running into major delays and cost overruns, with contracts terminated on the Aizkraukle line and works left unfinished at stations like Jumprava. Corruption Capacity Crunch: Prosecutor General Armīns Meisters warned Latvia’s anti-corruption drive is hampered by a shortage of undercover operational staff across investigative bodies. Energy & Industry: Sadales tīkls is using drones to speed power-line inspections, while pellet producers face pressure to prioritise domestic supply after shortages and price spikes. Riga Tourism Tax: Riga’s tourist tax will double to €2 per night from 2027 to fund marketing and business tourism.

Ukraine-Patriot Deal: At the NATO summit in Ankara, President Donald Trump said the U.S. will license Ukraine to manufacture Patriot air-defence systems, aiming to speed up production against Russian missile attacks. Latvia Defence Cooperation: Finland, Norway and Latvia signed a statement of intent on developing Patria TRACKX armoured tracked vehicles, opening the door to joint procurement and field-trial data sharing. Canada-Latvia NATO Ties: Prime Minister Mark Carney met Latvia’s Edgars Rinkēvičs, confirming Canada will extend Operation REASSURANCE to 2031 and deepen defence industrial cooperation, with Latvia hosting Canadian forces. Latvian Economy Watch: Latvia’s inflation eased to 3.4% year-on-year in June, down from 3.5% in May, as transport costs cooled. LDz Cargo Layoffs: Latvian Railways’ freight arm LDz Cargo plans 300 job cuts starting 1 August, citing shifts in rail freight demand and higher Russian tariff pressures. Energy & Industry: Pellet shortages are back in Latvia as prices rise; the climate and energy minister urged producers to prioritise domestic supply. airBaltic Traffic: airBaltic reported 509,700 passengers in June (+2% y/y) and 4,535 flights (+6.2% y/y), with load factor down to 81.9%. Regional Finance for Defence: Romania joined the Canada-led Defence, Security and Resilience Bank initiative, with Latvia among the founding states and a regional office planned in Bucharest.