Policy Performance


Economic Policies

Despite a prudent fiscal path, Latvia receives a middling score overall (rank 20) in the area of economic policy. Its score on this measure has improved by 0.3 points since 2014.

After a difficult crisis-era adjustment program, Latvia joined the euro zone in 2014. High growth rates have slowed, but remain above the EU average. A budget-cap law is in place, but structural reforms have met with resistance.

Though remaining moderately high, unemployment rates have fallen dramatically in the past half-decade, thanks in part to labor flight to Western Europe. Structural unemployment is a focus. Minimum monthly wage levels have been increased.

While the overall tax burden is low, the flat-rate income tax disproportionally affects low-income wage earners. Corporate-tax rates are quite low. Budget deficits are low and fiscally sustainable. The volume of bank deposits made by non-residents presents a systemic risk.

Social Policies

With a mixed safety-net record, Latvia scores relatively poorly overall (rank 34) with regard to social policies. Its score on this measure has declined by 0.3 points since 2014.

The population is well educated, but secondary schools are often of low quality. Needed higher-education reforms have stalled. Income inequality is substantial. A guaranteed-minimum-income program that addressed the neediest population during the crisis has been transferred to local governments. High emigration rates indicate the perceived lack of opportunity.

Health spending is comparatively low, requiring significant out-of-pocket expenditure. Health outcomes lag behind those in most EU countries. Parental-leave benefits are generous, and the employment rate among women is above the EU average.

Pension benefits are low, but the introduction of a three-pillar system has made it largely sustainable. While the country lacks a coherent integration strategy, a surge in asylum applications has prompted development of a refugee policy.

Environmental Policies

With generally good environmental-performance outcomes, Latvia receives high rankings internationally (rank 9) with regard to environmental policies. Its score on this measure has declined by 0.2 points relative to 2014.

The country shows strengths in environmental-health policy, air quality and biodiversity, though weaknesses on climate change and energy issues are evident. A new environmental strategy will use natural-resources tax revenues to fund waste-water management and R&D. Protection of the country’s significant forest territories is well organized.

The country complies with the Kyoto Protocol and other international agreements, and follows EU climate policy, but is not an agenda-setter.



Quality of Democracy

With generally fair electoral procedures, Latvia falls into the upper-middle ranks (rank 13) with regard to democracy quality. Its score on this measure has declined by 0.2 points relative to 2014.

Parties receive public and private funding, and campaign spending is capped. Concerns include off-book expenditures and payments made to influence media reporting. The opacity of media ownership means support for political actors is often hidden, and the public broadcaster has been subject to political influence. A significant share (15%) of residents cannot vote, being non-citizens.

Civil rights are generally protected, but concerns over prison conditions and privacy protections have emerged. Ethnic discrimination is an issue often in the media, with public rhetoric occasionally inflammatory.

Courts are independent but overloaded, with access regulated through the imposition of fees and security deposits, potentially limiting access. Corruption remains a problem, with the primary oversight body plagued by persistent internal disarray.



Executive Capacity

With significant strategic capability, Latvia receives a high overall ranking (rank 9) in the area of executive capacity. Its score on this measure has declined by 0.1 point since 2014.

A recently established core-government planning unit has deepened policy debates on strategic and cross-sectoral issues, helping to review line-ministry proposals, but suffers from resource constraints. Coalition parties have broad influence over the ministries they control, weakening the prime minister’s power. Cabinet committees play an integral decision-making role

RIAs are required for all draft proposals, but lack a specific sustainability review. Despite its frequency, the impact of societal consultation is not strong. Digital public-engagement tools are robust.

The government has a generally strong achievement record, with some notable gaps. Ministerial compliance is strong. Domestic adaptability to EU norms has proven substantial, with adjustment to OECD requirements now underway. Local governments have considerable responsibility, but funding is occasionally insufficient.

Executive Accountability

With notable oversight weaknesses, Latvia receives low rankings in international comparison (rank 35) with regard to executive accountability. Its score on this measure has declined by 0.1 point since 2014.

Parliamentarians’ resources are very limited, despite adequate formal oversight powers. The independent audit office lacks the power to audit the parliament. The extra-parliamentary ombuds office has been increasingly active and visible.

Citizens are slow to engage with the political process, with few belonging to political parties. Only a small share feels they can influence decision-making. Few of the main media brands offer high-quality analysis, and some allow content to be influenced by commercial or political advertisers.

Economic associations are sophisticated, influencing policy through the Tripartite Council. Most social-interest groups lack the capacity to propose concrete policies, but environmental organizations have considerable influence.
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