Latvia's per-capita state spending up more than 18-fold in 30 years

Running the Latvian state has become far more expensive while the population shrinks. The Latvian daily Diena makes the case in a commentary based on Central Statistical Bureau data for 1995 and 2025. It matters because the state budget has been in deficit for several years, and EU funding after 2028 is not certain.

The figures

In 1995, Latvia had 2.5 million residents, and general government revenue was 1.387 billion euros, or an average of 555.02 euros per person. In 2025 the population was 1.861 million, and revenue per resident reached 10,069.44 euros. The population has therefore fallen by 25.6%.

Expenditure per resident rose from 578.21 euros a year (48.19 euros a month) to about 10,657 euros a year, roughly 888 euros a month. The author says that in 1995 the state managed on 1.445 billion euros, while in 2025 it needed 19.832 billion euros, or 17.3 times more. The minimum wage has risen about 19.5 times since 1995, from 28 lats, or nearly 40 euros, to 780 euros in 2026.

Explanations

The author cites inflation, higher global resource prices, minimum tax thresholds set by the EU, and national decisions to raise excise, natural resource and value added tax rates. Fewer residents means fewer taxpayers, while inflation pushes up the cost of maintaining infrastructure.

Possible solutions

Last year revenue was not enough to cover all needs, so the state had to borrow. The author argues that growing debt also raises the cost of servicing it. He lists cutting costs, lowering the quality or availability of services, reviewing state functions, raising taxes and selling state assets as options. He also calls for promoting business and reducing bureaucracy. A new EU multiannual budget starts in 2028, and it is not known how much support Latvia will receive.