Latvia's government spending per resident up more than 18-fold since 1995

Latvia's state finances have grown far faster than its population since 1995, according to Central Statistical Bureau data cited in a Dienas Bizness commentary. As a result, each taxpayer must on average support a much larger public budget, and spending still exceeds revenue.

The figures

In 1995 Latvia had 2.5 million residents, and general government revenue was €1.387 billion, or an average of €555.02 per person. In 2025 the population was 1.861 million, and revenue per resident reached €10,069.44. The population has shrunk by 25.6%, while revenue per person has grown more than 18-fold.

General government expenditure per resident was €578.21 in 1995 and €10,656.98 in 2025. Over the same period the minimum wage rose roughly 19.5 times, from 28 lats (almost €40) to €780 in 2026.

Explanations

The commentary's author links the increase to inflation, higher global resource prices, minimum tax rates set by the EU, and national decisions to raise consumption taxes, including excise duty, natural resource tax and value added tax. A shrinking population also narrows the pool of taxpayers while infrastructure upkeep costs rise.

Deficit and EU funds

In 2025 revenue again fell short of needs, so the state borrowed. The author points out that debt servicing costs are rising and that loans may become more expensive in future. A new EU multiannual budget starts in 2028, and there is no guarantee what level of EU structural fund support Latvia will receive.

The commentary lists possible responses: cutting costs, reviewing state functions, raising taxes or selling state assets, though the last two are described as short-term measures. As a longer-term path, the author proposes encouraging business activity and reducing bureaucratic burdens.