AGP Executive Report

airBaltic Watch: Latvia’s Cabinet held a closed extraordinary meeting on the “current situation at airBaltic”, with the State Treasury set to represent Latvia at an Aug 3 bondholders’ meeting—signalling that the airline’s next steps hinge on creditor talks. UAV Industrial Push: Latvia and Ukraine signed memorandums to jointly develop, produce and test unmanned systems, aiming to attract investment, transfer Ukrainian know-how and build dual-use testing infrastructure in Latvia. Housing & Immigration Controls: Latvia’s Economy Minister proposes stricter rules for third-country nationals by allowing temporary residence permits to be revoked when living space falls below 4 sq m per person in severely overcrowded housing. Energy Grid Expansion: Sadales tīkls plans new 110 kV substations in Saulkrasti and Saldus plus upgrades in Salacgrīva to connect new producers and consumers, supported via the EU Modernisation Fund. Tech & AI Funding: The EU launched a €10bn drive to build AI “Gigafactories” across Europe, targeting large-scale computing capacity for businesses and researchers. Consumer Tech: Tele2 Latvia reports Latvian smartphone sales down 10% year-on-year in H1 2026. Business & Trade: Carlsberg expands its PepsiCo bottling partnership, adding Azerbaijan from 2027 and extending PepsiCo bottling coverage across more markets including Latvia from 2029. Local Industry: Latvia’s wood pellet makers temporarily paused new orders as demand surged, focusing on fulfilling existing contracts.

Immigration & Housing Rules: Latvia’s Economic Affairs Minister Viktors Valainis wants a new immigration-control mechanism that could revoke temporary residence permits if foreigners live in premises with under 4 sq m per person, aiming to curb extreme overcrowding and unsanitary conditions. airBaltic Watch: Prime Minister Andris Kulbergs chaired a closed Cabinet meeting on the current situation at airBaltic, with Transport Ministry reporting expected to guide next steps. Energy Grid Build-out: State power grid operator Sadales tīkls will add new 110 kV substations in Saulkrasti and Saldus and upgrade Salacgrīva, boosting capacity for new producers and consumers under an EU Modernisation Fund call. Defense Tech Cooperation: Latvia and Ukraine signed memorandums to jointly develop, produce and test unmanned systems, including technology transfer and testing infrastructure in Latvia. Electricity Interconnection Study: AST and Sweden’s Svenska kraftnät will run an economic study for the LaSGo Latvia–Sweden–Gotland link by end-2026, paving the way for EU co-financing. Corporate & Consumer Signals: Carlsberg will become PepsiCo’s bottler in Azerbaijan from 2027, while Latvian pellet producers temporarily paused new orders after demand surged. Crime & Finance: Police in Estonia found €3,000 in cash on a suspected money mule tied to fraud cases involving PIN theft and fake bank/police calls. Business & Labor Housing: Balticovo invested over €2m in staff flats in Iecava, converting a Soviet-era structure to modern housing for about 120 employees. Crypto Market Friction: Reports say Binance is missing from Google Play in some EU countries including Latvia, with the exchange blaming Google Play policy updates tied to compliance changes.

Retail Momentum: Latvia’s retail trade turnover rose 4.8% year-on-year in June 2026, with online/mail-order sales up 18.6%, food up 4.6% and non-food up 5.9% (except automotive fuel). Cinema Deal: Latvia’s Competition Council cleared Forum Cinemas’ acquisition of Cinamon’s cinema-premises lease rights at Akropole Alfa in Riga, saying it won’t significantly reduce competition. Border Pressure: Estonia says illegal migrants are being pushed toward Latvia’s border via Belarus, adding strain on migration centres and services. Hydrogen Pipeline Consultation: Conexus Baltic Grid launched a public consultation for the Nordic-Baltic Hydrogen Corridor’s Latvia section (about 270–280 km), with construction eyed for around 2029 and operations after 2033. Crypto App Access: Binance reportedly disappeared from Google Play in some EU markets including Latvia, with the exchange blaming Google Play policy updates tied to MiCA compliance. Rail Baltica Leadership: Rail Baltica Lithuania appointed a new CEO to keep the project on schedule, with construction underway on 114 km. School Costs Reality Check: A survey finds 37% of Latvian families have under EUR 100 for back-to-school, despite typical costs often exceeding EUR 100. Industrial Push in Latgale: Rēzekne plans a new industrial park (30 hectares) with municipal infrastructure and land plots offered for lease to attract investors. Media Automation: Latvia-headquartered Spotwise launched “aOS,” an AI-driven system to automate media workflows across radio, TV and podcasts. Alcohol Sales Rules: Retailers say Latvia’s alcohol sales restrictions haven’t cut total purchases much, but they’ve shifted when and what people buy.

Energy Infrastructure: Conexus Baltic Grid has opened an initial public consultation for the Nordic-Baltic Hydrogen Corridor, running 28 July–1 September 2026, covering 1,773 land parcels on the Latvian section (about 270–280 km), with a goal to align the hydrogen route alongside existing gas lines and target operations after 2033. Consumer & Events: Latvia’s Economy Minister says the cancelled Pitbull concert may still be rescheduled; ticket holders can either request refunds within 14 days or keep tickets valid if a new date is announced. Transport & Tech Regulation: Estonia’s first remotely controlled taxi crash has reignited liability questions, with the operator required to keep a driver onboard under current rules. Industrial Development: Rēzekne plans a new industrial park north of the city on ~30 hectares, with the municipality building roads and utilities and leasing plots to investors via open auctions. Logistics & M&A: DHL has agreed to acquire Venipak, strengthening its Baltic parcel delivery footprint across Lithuania, Latvia and Estonia. Media & Broadcasting Tech: Channel 4 selected Encompass Digital Media to run cloud-native managed linear playout from London and Riga starting in 2027. Cross-border Security Works: Latvia continues border strengthening on a difficult 42 km stretch along the Latvia–Russia border, with some segments due only in 2027. Business Automation: Spotwise launched “Spotwise aOS,” an AI workflow system to automate media tasks end-to-end, from advertiser discovery to outreach drafting.

DHL deal reshapes Baltic logistics: DHL eCommerce has signed to acquire Venipak Group, giving it a fully owned parcel network across Lithuania, Latvia and Estonia (Venipak’s ~800 lockers and terminals), pending regulatory approvals. Media infrastructure upgrade: UK broadcaster Channel 4 selected Encompass Digital Media for managed linear playout across six channels, with services due to go live in 2027 from dual hubs in London and Riga. Latvia border works continue: Latvia is extending border infrastructure along a 42 km stretch with difficult terrain, with some segments due only in 2027 and expropriation compensation costs estimated at about €220,000. Banking snapshot: Latvia’s monetary financial institutions earned €181.2m profit in the first half of 2026 (down 9.3% y/y) while loans and deposits kept growing. Fuel price contingency: Latvia’s Economics Ministry urges the government to prepare support measures as fuel prices rise amid higher global volatility. EU sanctions stance: The European Commission says it is “very confident” sanctions against Kremlin spokesman Peskov’s wife are justified. Trade and investment: OTP’s Baltic expansion via full control of Luminor lifted Moody’s outlook for Hungary’s OTP Bank to positive.

Ukrainian Integration Plan: Latvia’s Cabinet has tasked the Ministry of Culture with drafting a long-term action plan to support Ukrainians living in the country beyond 2027, shifting from emergency help to lasting integration with input from the Interior Ministry, the Society Integration Foundation, municipalities and NGOs. Fuel Cost Watch: Economics Minister Viktors Valainis has urged early preparation for possible fuel-price support as Brent and diesel benchmarks jumped sharply, citing rising global volatility and geopolitical risk. Banking Snapshot: Latvia’s banks’ combined profit fell to €181.2m in H1 2026 (down 9.3% y/y) even as lending and deposits kept growing, with resident loans up 13.4% and deposits up 11.2%. ICT Procurement Overhaul: Latvia will keep its moratorium on large public-sector ICT purchases until a single oversight authority is set up, after reporting about €5m saved so far. Logistics Deal: DHL eCommerce has agreed to acquire Venipak Group, giving DHL a fully owned Baltic parcel network across Latvia, Lithuania and Estonia. Crypto Register Update: ESMA added 15 MiCA-licensed crypto providers, bringing the total to 309, including BNY’s Belgian unit. School-Year Pressure: A Norstat survey for Akropole Latvia finds 37% of families plan under €100 per child for back-to-school, while many worry most about children’s emotional wellbeing. Energy Transition: The Nordic-Baltic Hydrogen Corridor says 87% of projected 2040 capacity is already backed by market interest, with Conexus Baltic Grid (Latvia) among the operators. Ukraine Aid Fundraising: Donations are being sought to help Latvia’s destroyed honorary consulate in Sloviansk and to secure new premises for its work.

ICT Procurement Reset: Latvia will keep its moratorium on large public-sector ICT purchases until a single oversight authority is set up, with the government saying about €5m has already been saved and reforms aim to improve planning, value-for-money and procurement control. Banking & Credit Pulse: The Bank of Latvia reports lending growth in H1 2026 despite higher rates and uncertainty—household loans up 10.6% y/y and corporate loans up 14.4%—while deposits also rose. Crypto Regulation: ESMA added 15 crypto-asset service providers to its MiCA register, bringing the total to 309; BNY’s Belgian unit is among the new entrants for custody and transfer services. Trade Curbs: Latvia approved restrictions on imports of Russian and Belarusian books, newspapers, video games and other goods, with the rules expected to run until 1 July 2027. Energy & Industry: The Nordic-Baltic Hydrogen Corridor says 87% of projected 2040 capacity is already booked, with demand forecast to reach 79.2 TWh by 2040. Logistics Deal: DHL eCommerce agreed to acquire Baltic parcel operator Venipak, folding operations in Lithuania, Latvia and Estonia into its division to boost last-mile reach. Food Production Rebound: After African swine fever, Vaiņodes Bekons is resuming operations, with the herd rebuilding process underway and over 1,000 breeding gilts already introduced.

Banking Watch: Latvia’s central bank says lending kept growing in H1 2026 despite higher EURIBOR and uncertainty, with household loans up 10.6% y/y to nearly €7.2bn by end-June and mortgage lending up 9.5%; deposits also rose as households stayed cautious and corporate deposits grew faster. EU Funding for Rail Baltica: MEP Roberts Zīle urges Latvia to tap more EU programmes beyond the Connecting Europe Facility, warning it’s unrealistic to expect a fifth of the new €50bn rail fund and noting cohesion money could be lost if contracts aren’t signed by August. Crypto Regulation: ESMA added 15 crypto-asset service providers to the MiCA register, bringing the total to 309 licensed firms; Latvia and Bulgaria each gained two new providers. Energy Disruption in Riga: Rīgas siltums will run hydraulic safety checks on 30 July, cutting hot water across large parts of Riga’s right bank and parts of central/Old Riga for most of that period. Sanctions & Diplomacy: EU foreign policy chief Kaja Kallas condemned Russian strikes on Sloviansk, including damage to Latvia’s honorary consulate, and said Brussels will summon Russia’s envoy and propose further sanctions. Ukraine Support: Latvia’s reconstruction commissioner Juris Poikāns outlines priorities for military aid, energy security and rebuilding, especially in Chernihiv. Corporate/Finance Compliance: Swedbank’s NYDFS settlement highlights a €50m penalty tied to withholding information from investigators, not underlying AML conduct in Baltic subsidiaries.

EU/Latvia Sanctions & Diplomacy: EU foreign policy chief Kaja Kallas says Brussels will summon Russia’s envoy and propose fresh sanctions after Russian strikes hit Sloviansk, including damage to Latvia’s honorary consulate. Public Finance & Procurement: Latvia’s authorities, with the EPPO, raided two hospitals in a €657,000 EU-funds fraud probe tied to suspected bid-rigging and abuse of office over sterilisation and medical tech contracts. Aviation & State Oversight: Latvia’s prosecutor’s office opened a legal compliance check into airBaltic’s finances after a request from Prime Minister Andris Kulbergs, as potential foreign investors weigh in. Energy/Industry Investment: Latvia is moving toward full-cycle artillery rocket manufacturing with a planned up to €90m US investment, backed by Valainis and related agreements. Security & Trade Risk: NATO-linked concerns over hybrid threats keep rising as Latvia’s consulate damage and broader strike patterns underline business and infrastructure exposure. Food Markets: USDA data points to stabilising egg prices after a sharp retreat, while cattle futures stay under pressure—keeping beef costs a live risk for consumers and retailers.

Latvia–Russia Signage Policy: Latvia’s Transport Minister Rihards Kozlovskis says there’s “no need” for road signs pointing to Belarus and Russia, with plans to replace or cover 235 signs on state roads and 78 in Riga by Sept. 30, estimated at about €120,000. EU Sanctions Watch: The EU agreed a 21st Russia sanctions package, tightening financial-sector restrictions and keeping the crude oil price cap at $44, though member states blocked some proposals—an ongoing sign of “sanction fatigue.” Latvian Consulate Hit in Sloviansk: EU foreign policy chief Kaja Kallas condemned Russian strikes that damaged Latvia’s honorary consulate in Sloviansk, with Brussels set to summon Russia’s envoy and consider more sanctions tied to the military-industrial complex. EPPO Hospital Fraud Probe: Latvia authorities raided two hospitals in an EPPO-led €657,000 EU-funds fraud investigation over suspected bid-rigging and abuse of office in sterilisation and medical tech procurement. airBaltic Investor Talks: Latvia’s airBaltic is in discussions with three potential strategic investors to reduce reliance on taxpayer support. Transport & Security Context: NATO and partners flagged possible hybrid threats on the Eastern flank as the war escalates, keeping Latvia’s security and infrastructure priorities in focus.

EU Anti-Fraud Crackdown: Latvian authorities, with the European Public Prosecutor’s Office, raided two hospitals in a €657,000 suspected fraud probe tied to COVID-19 recovery procurement, including alleged bid-rigging and abuse of office around sterilisation and medical technology contracts. airBaltic Scrutiny: Latvia’s prosecutor’s office opened an investigation into whether officials handled airBaltic’s finances lawfully, after a request from Prime Minister Andris Kulbergs amid ongoing investor talks. Russia-Ukraine Fallout for Latvia: EU foreign policy chief Kaja Kallas condemned Russian strikes that damaged Latvia’s honorary consulate in Sloviansk and said Brussels will summon Russia’s envoy and push further sanctions. Frontline Impact: Russian attacks around Sloviansk killed and injured civilians and damaged homes and businesses, underscoring the economic and human costs of the war. Baltic Business Context: Estonia’s unicorn count per capita is being widely cited globally, but analysts warn the metric can mislead policymakers chasing the wrong targets.

airBaltic Under Scrutiny: Latvia’s Prosecutor General’s Office has opened an investigation into whether officials handled airBaltic’s financial situation legally, following a request from Prime Minister Andris Kulbergs—raising fresh pressure as the carrier negotiates with potential strategic investors and faces a looming 31 August repayment deadline on a 30m euro state loan. EU Sanctions & Diplomacy: EU foreign policy chief Kaja Kallas says the bloc will summon Russia’s envoy and propose new sanctions after Russian strikes, including damage to Latvia’s honorary consulate in Sloviansk. Ukraine War Hits Latvia’s Consulate: Russian guided aerial bombs killed five and injured nine in Sloviansk, destroying the Latvian honorary consulate building; Latvia’s FM says the incident was reported to EU and NATO partners. Banking Compliance Watch: New York regulators fined Swedbank $50m over failures to fully cooperate and disclose information in a Panama Papers-linked probe, underscoring AML and regulator-relations risk. Tourism Shock in Border Regions: Bulgaria, Latvia, Lithuania, Poland, Romania, Slovakia and Estonia asked the European Commission for help as security concerns and drone activity reportedly drive down tourist flows.

Latvian Defence Industry: Latvia is moving toward full-cycle artillery rocket production after Economics Minister Viktors Valainis signed a memorandum with a Latvian company linked to US-based Native Trading; the project targets €70–90m investment, aims to create about 150 jobs, and could reach at least €600m in exports within five years. AirBaltic Under Scrutiny: Latvia’s Prosecutor General’s Office has launched an investigation into whether officials handled airBaltic’s finances lawfully, following a request from PM Andris Kulbergs—adding pressure as the state’s short-term €30m loan repayment deadline (31 August) nears and investors weigh risk. Ukraine War Spillover: Russia’s strikes on Sloviansk damaged Latvia’s honorary consulate; EU foreign chief Kaja Kallas says Brussels will summon Russia’s envoy and propose new sanctions tied to the military-industrial complex. Tourism & Infrastructure: Kurzeme’s Ziemupe–Vērgale gravel road is driving visitors away, with locals blaming years of poor maintenance and delays in upgrades. Energy Markets: ONTRAS says market demand for the Nordic-Baltic Hydrogen Corridor is strong, with projected demand reaching 79.24 TWh annually by 2040, supporting plans for commercial use from 2033+. Corporate Moves: PLG agreed to acquire Romanian ticketing platform iaBilet, expanding its Central and Eastern Europe footprint. Pharma Expansion: Olpha marked a milestone in a €5.84m facility upgrade to boost finished dosage manufacturing capacity up to 2.5x and start new medicine production.

Defense Industry Push: Latvia is moving to full-cycle artillery rocket production after Economics Minister Viktors Valainis signed an MoU with a Latvian company linked to US-based Native Trading; the €70–90m plan covers propellant, warhead filling, assembly and testing, aiming to boost industrial capacity and jobs. Cybersecurity Readiness: A new warning for Latvian firms: cyberattacks are no longer rare, with recent incidents hitting public services and pharma, and ransomware still a major European risk. Open Data for Business: A practical guide to how EU open data can be turned into products and competitive advantage, from company registries to geospatial and weather datasets. EU Funds Fraud Probe: Latvia’s hospitals were raided by EU prosecutors in a fraud investigation tied to sterilisation equipment and medical services funded via the COVID recovery package. Russophobia Crackdown: Latvia’s parliament approved a ban on Russian and Belarusian books, toys, games and clothing produced in those countries, running until July 1, 2027, while transit remains allowed. Energy Markets: Hybrid PPAs with battery storage are gaining traction across Europe despite higher prices, as solar PPA pricing ticks up. Finance: Signet Baltic Bond Fund delivered a 7.6% return in its first year, targeting Baltic corporate bonds. Trade & Agriculture: Latvia’s frozen blackcurrant exports hit a record €860k+ in 2025, while growers see more opportunities in northern berries.

EU Prosecutors Crackdown: Latvia’s Pauls Stradiņš Hospital expansion is back in the spotlight after EU prosecutors raided two hospitals over alleged EU-funds fraud tied to sterilisation and medical tech procurement, with suspected bid-rigging ahead of tenders. Public Money Under Pressure: The project’s cost has reportedly jumped to €157.4m from €88.1m, with delays, contract changes and EU financing eligibility disputes now clarified by Latvian authorities. airBaltic Funding Debate: Prime Minister Andris Kulbergs says airBaltic must secure a strategic investor so it won’t need taxpayer support every year, pointing to 2025 losses of €44.3m and 5.2m passengers. Baltic Banking Deal: OTP Bank has agreed to acquire Luminor from Blackstone and DNB, a major ownership shift that reshapes the Baltic banking landscape. Parliament Voting Tech: Latvia’s Saeima has started using a new electronic voting system after replacing machines dating back to 1997, with security testing involving CERT.LV. Energy Infrastructure: Nordic-Baltic Hydrogen Corridor demand is projected to reach about 79.2 TWh by 2040, with commercial operations targeted around 2033. Tourism Recognition: Latvia has been shortlisted for major inbound tourism awards in the UK and Finland, boosting visibility for its tourism sector.

Baltic Power Security: Latvia, Lithuania and Estonia agreed to jointly develop reserve capacities for their power systems, aiming to speed up electricity restoration for households and businesses after disruptions, with grid operators to assess needed reserve equipment and seek EU funding. Banking & M&A: Latvia’s President and PM weighed in on the proposed sale of Luminor to Hungary’s OTP, with leaders stressing the process is still at an early stage and that regulators and security checks will matter most. Energy Markets: Europe is shifting toward hybrid power purchase agreements as solar prices reverse upward and buyers increasingly pay for battery-backed flexibility, according to a European PPA price index. Tourism Push: Latvia has been shortlisted for major international tourism awards in the UK and Finland, with LIAA highlighting the role of sustained inbound marketing. Payments Trend: Euro area card payments hit new highs as non-cash transactions keep growing, while Cyprus outpaces the euro area in digital payment adoption. Latvia Risk Planning: Latvia published a National Risk Catalogue covering 48 threat types and urging institutions and entrepreneurs to use it for crisis preparedness. Cyber Watch: Tele2 Latvia reported a record number of cyber-threats blocked in June, led by malware, phishing and fake websites. Real Estate Investment: Latio launched sales of investment apartments in Riga’s Youston Co-Living project, offering leased units and yields up to 11.18%. Logistics for SAF: Allied Biofuels outlined planned SAF and e-SAF export routes from Uzbekistan to Europe and the UAE via rail and sea corridors, backed by a Latvia-based logistics partner.