Moody's has based the maintenance of Latvia's credit rating at the level of A3 on a stable state of public finances, which is the result of a strict fiscal policy that was consistently followed before the pandemic.
The Agency expects the general government debt level to remain stable in the coming years, which is slightly above 40% of Latvia's gross domestic product (GDP).
Despite the planned increase in public budget expenditure, which will mainly be driven by increased funding for national defense and security, Moody's believes the state of public finances will be stable over the next three years.
The agency projects the general government deficit to be around 2.9% of GDP in 2024, but it will gradually decline in the future - in 2025 to 2.6% of GDP and in 2026 to 1.7% of GDP.