Latvia unveils plan to close FDI gap with Estonia, Lithuania
The Latvian capital of Riga from St Peter's Church/ Source: Wikipedia

Latvia unveils plan to close FDI gap with Estonia, Lithuania

Central European Times 2 min read

Latvia has approved a national plan aiming to catch up with neighbouring Estonia and Lithuania for foreign direct investment (FDI) and corporate lending by 2029.

The Action Plan for Attracting Investment and Access to Finance is targeting a rise in FDI equity from EUR 22.5bn to EUR 32bn and business lending from 14% to 17% of GDP by 2029, the Latvian Economy Ministry explained.

Current FDI Stock by Country 2025/ Source: Invest in Latvia, Eurostat

"Attracting foreign capital is a key priority," Latvian Economy Minister Viktors Valainis said, LSM reported. The ministry has defined specific tasks to ensure that the Latvian Investment and Development Agency (LIAA), banks and corporate fintech sandbox Altum do as much as possible to achieve these goals, he added.

The Latvian Economy Ministry said that the framework includes 15 measures supported by EUR 270mn in public funding that is expected to leverage EUR 2.4bn in private investment.

The plan aligns with a joint position adopted by the Baltic Council of Ministers in May, in which the three countries pledged to make the region a coherent investment destination.

Valainis said implementation of the new measures would begin in the second half of the year. “We cannot afford for investment or credit to remain structurally below our neighbours. This is a competitiveness issue,” Valainis said.

Development agency to use financial instruments

The LIAA said the government aims to promote Latvia as a safe and attractive location for investment through a mix of financial instruments, infrastructure support and improved investor services.

Proposed instruments include a strategic partnership fund for foreign co-investment, a pension-backed equity fund managed by Altum and reforms to corporate bond market infrastructure.

The LIAA recalled that it attracted EUR 156mn in new foreign investment across 9 projects in the first half of 2025, creating 545 jobs. In 2024, LIAA secured EUR 655mn in investment.

The agency also reported a total pipeline of EUR 11.5bn in active investment projects. The Foreign Investors’ Council in Latvia said its sentiment index had improved to 3 out of 5 in May, up from 1.9 a year earlier, reflecting stronger institutional engagement and a clearer reform mandate.

Latvia targets bio, energy, ICT, mobility FDI

The investment strategy identifies four priority sectors: bioeconomy, smart energy, information and communications technology (ICT), and mobility. It includes proposals to reduce regulatory barriers, increase access to growth capital and expand the LIAA’s international outreach network.

Corporate Loan to GDP Ratio (2025)/ Source: Eurostat, Centre for Economic and Information Consultancy

Latvia lags its Baltic peers on investment intensity and credit availability, underperforming both on per capita FDI and access to non-bank finance, according to the Organisation for Economic Co-operation and Development (OECD).

The relative success of Estonia and Lithuania has been driven by stronger venture ecosystems and EU-funded industrial programmes, the EU's official statistics office Eurostat added.

Latvia Estonia Lithuania Action Plan for Attracting Investment and Access to Finance Latvian Economy Ministry Viktors Valainis Latvian Investment and Development Agency Altum Baltic Council of Ministers Iveta Strupkaja Foreign Investors’ Council in Latvia bioeconomy smart energy ICT mobility Organisation for Economic Co-operation and Development Eurostat

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