Latvia's Ministry of Finance has circulated for coordination with ministries and other stakeholders an informative report setting out proposals to accelerate capital market development and to progress state and municipal capital companies towards initial public offerings. The report updates on progress against earlier goals and outlines further steps intended to broaden financing options and investment opportunities while maintaining investor protection. The report notes a gradual increase across the Baltics in companies raising financing through bond issuance, with Latvia showing the strongest recent growth. In 2024 there were six new bond issues or refinancings in Estonia, 11 in Lithuania and 19 in Latvia, while equity market growth has been more moderate. It also highlights rising retail participation in Latvian savings bonds, with outstanding investments reaching EUR 322 million at end-2024 and more than half of redeemed amounts being reinvested; from January to May 2025, EUR 108 million was issued, roughly matching redemptions over the same period. On the state-owned enterprise pipeline, only three state or municipal companies are currently planning an IPO by 2027, namely Air Baltic Corporation, Latvijas autoceļu uzturētājs and Rīgas namu pārvaldnieks, which the report indicates is insufficient to meet market capitalisation growth objectives at the current pace. Proposed reform directions include engaging in European Union discussions on establishing an Investment and Savings Union while transposing EU capital markets legislation into national rules, reviewing personal income tax to encourage long-term savings, revisiting corporate income tax thin capitalisation rules and expanding exemptions for financial institutions, assessing an investor representative institution, considering introduction of a REIT regime, developing locally adapted securitisation instruments, and amending legislation to end the Initial Register’s operation with a transition period. On next steps for state participation and IPO-related divestments, the report links further action to a State Chancellery draft bill amending the framework for governance of public capital shares, which would enable reassessment of state participation even for companies currently subject to disposal prohibitions and, after adoption, decisions on minority stake disposals via IPO. It also references a 13 May 2025 Cabinet decision identifying the sale of minority stakes of at least 10% in state-owned companies through public offerings by 2029 as a measure to reduce gross public debt, including for commercial state-owned companies currently subject to statutory privatisation bans.

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