The Ministry of Economics has identified five main areas of activity aimed at developing the defense industry, according to the ministry's report "On the Development of the Economy of Latvia," published on the legal acts portal.
The report explains that the goal is to direct at least 500 million euros in investments to the defense sector and to develop local military production with parallel integration into the supply chains of NATO and the European Union (EU).
The main areas of action include targeted investments in the development of the defense industry: the implementation of new research and development projects, increasing military production capacities in Latvia, removing administrative barriers for the development of the industry, creating a contact point at the Latvian Investment and Development Agency (LIAA) to attract and implement large projects in the defense industry, as well as forming reserves of essential goods, food, medicines, and fuel.
The report notes that the "Defense Industry and Innovation Support Strategy for 2025-2036" provides for the creation of an investment attraction model in 2025 that will allow Latvia to integrate more successfully into international supply chains. In this process, LIAA is designated as the main contact point for working with foreign investors on defense and dual-use projects.
At the same time, specialized support programs for the defense industry are being created, including within the framework of the Ministry of Economics' investment fund of 67 million euros, and it is also proposed to direct unspent EU fund resources to support industrial capacity development projects amounting to 150 million euros.
The report states that to strengthen Latvia's defense capabilities, support is available for the development of new dual-use products under the "Support for the Development of New Products and Internationalization" program (third stage). Grants of up to 1 million euros for industrial research, experimental development, and feasibility studies are available to micro, small, medium, and large enterprises. The total budget of the program is 29.4 million euros.
In the first project selection, 25 dual-use projects were supported for a total of 13.8 million euros. In the second selection, which concluded on January 19 of this year, 71 project proposals were submitted, and it is planned to support at least 20 more projects.
Targeted investments in the development of the defense industry have also begun: to date, more than 273 million euros have been directed, including grants for research and development of dual-use products (30 million euros), capital discounts for production and innovative loans amounting to 70 million euros, 2 million euros for incubation (competition in the first quarter of 2026), support through 22 LIAA representations, capital discount loans for large investment projects (67 million euros, with priority for military projects), an industrial capacity development program (70 million euros), and individual financing guarantees (34 million euros).
The report indicates that a large investment fund from the state budget is also available for primary agricultural production and the production of military goods. From November 2025, financing of 67.04 million euros will be available, with applications accepted from November 20, 2025, to March 20, 2026. Projects totaling 858 million euros have been submitted. The available financing will only cover about a quarter of this amount, indicating the need for additional funding in the future.
To develop scalable projects in the defense industry, a support program of 150 million euros is planned, providing companies with the opportunity to receive capital discount loans for projects costing between 10 and 100 million euros.
The equity fund of the development financial institution JSC "Altum" for growth and defense is planned to be developed in 2026. Its goal is to invest on commercially viable terms in Latvian enterprises and projects significant for the country, including infrastructure, public-private partnerships (PPP), and the defense sector. The planned volume of the fund is at least 120 million euros, of which 100 million euros will come from pension funds and 20 million euros from the defense budget, with the possibility of increase. 20-30 investments are planned in the fields of defense, energy, information technology, artificial intelligence, and other rapidly growing sectors.
The report also states that a new, more efficient model for procuring state reserves of petroleum products has been implemented, and the formation of reserves of essential goods has begun. Gradually, by 2029, the state will fully purchase petroleum product reserves, which will save 877 million euros over the next ten years.
It is also noted that in 2024, legal regulations have been developed to define the procedure for ensuring the population with essential goods in case of threats to the state. These functions have been delegated to the company LLC "Public Asset Manager 'Possessor'", and organizational measures have already begun, including the procurement of such goods.
Furthermore, to allow the aviation sector to optimize costs associated with the creation and maintenance of state reserves of petroleum products without increasing the financial burden on enterprises and end consumers of gasoline and diesel fuel, regulations have been developed to exempt from charges for consumed aviation fuel, provided that the industry maintains its reserves independently, the report states.
