This week, the Baltic presidents called for reforming the UN Security Council, and defence officials discussed strengthening NATO’s eastern flank. As new GDP forecasts were published, Estonia’s government presented its draft budget for 2025, while the Latvian government unveiled plans for tax changes. Also, possible pension reforms were discussed in both Latvia and Lithuania.
***
BALTIC
Baltic: Presidents call for UN Security Council reform
The presidents of the three Baltic States called for reforming the UN Security Council. They stressed the need to support Ukraine and hold Russia accountable for its military aggression.
Baltic: Defence ministers to seek NATO, EU support for regional defence infrastructure
Baltic and Polish defence officials met in Latvia’s Daugavpils to discuss strengthening regional defence infrastructure. The officials agreed on seeking NATO and EU support for the construction of the Baltic Defence Line.
Baltic: EBRD’s GDP forecast down for Estonia, Latvia, up for Lithuania
The EBRD expects the Latvian and Lithuanian economies to grow and the Estonian economy to contract in 2024. The bank lowered its GDP growth forecast for Estonia and Latvia, but raised its forecast for Lithuania.
Baltic: Estonia ranks highest on Global Innovation Index in 2024
Estonia ranks highest in the Baltic States on the World Intellectual Property Organization’s Global Innovation Index. Estonia ranked 16th globally in 2024, followed by Lithuania in 35th and Latvia in 42nd place.
***
ESTONIA
Estonia: GDP to rise by nearly 2% in 2025, 3% in 2026: central bank
Estonia’s GDP will drop by 0.4% in 2024, before rising by 1.9% in 2025 and 3.0% in 2026, the Bank of Estonia forecasts. Annual inflation will reach 3.5% in 2024, rising to 3.9% in 2025 and then falling again to 3.6% in 2025. Unemployment rate will remain at 7.6% over 2024-2026.
Estonia: PM submits draft state budget for 2025 to parliament
Estonian PM Kristen Michal has presented the draft state budget for 2025 to parliament. Budget spending will rise by 3.8% to EUR 19.1bn and revenues by 5.2% to EUR 17.7bn. The budget deficit will amount to EUR 1.35bn or 3% of GDP. Compared to 2024, the deficit will decline by 11.5%.
Estonia: Government drops plans for sugar tax
The Estonian government has dropped plans to impose a sugar tax on sweetened beverages, PM Kristen Michal announced. Health Minister Riina Sikkut noted that the coalition agreement only allowed new taxes to finance defence and security needs.
Estonia: Electricity storage to be freed from double fees
Estonia’s Ministry of Climate has proposed exempting electricity storage facilities from double fees as of 2026. Also, the amendments would free consumers from charges for self-produced electricity as of 2027.
Estonia: Ministries, stakeholders criticise proposed climate law
Several ministries and stakeholders in Estonia have criticised the Ministry of Climate’s proposed new climate law. They argued that the bill was unclear and economically harmful. The bill is due to become law in February 2025.
Estonia: Unions demand 12% minimum wage rise in 2025
The Estonian Trade Union Confederation (EAKL) and the Confederation of Estonian Employers (ETK) have begun negotiations on the minimum wage for 2025. EAKL demands that the minimum wage be raised by 12%. The minimum wage in Estonia now stands at EUR 820.
Estonia: Housing price index up 6.7% on year in Q2/2024: statistics
Estonia’s housing price index rose by 6.7% on year in Q2/2024, Statistics Estonia reports. Compared to Q1/2024, the index rose by 2.8%. The index measures changes in the square metre prices of housing transactions.
Estonia: Officials again deny accident in Balticconnector case
Estonian officials have again refuted claims that the rupture of the Balticconnector gas pipeline and two data cables in the Baltic Sea by a Chinese cargo ship in October 2023 was an accident. China has not responded to Estonia’s and Finland’s request for legal assistance in the investigation.
Estonia: Estonia, Finland to strengthen protection of undersea energy infrastructure
Estonia and Finland have agreed to increase cooperation in protecting critical undersea energy infrastructure, including through better surveillance and repair capabilities. The agreement points specifically to the Balticconnector gas pipeline and the EstLink electricity transmission cables.
Estonia: Joint plans for maritime defence with Finland
Estonia and Finland are drawing up joint plans for increased maritime defence, Major General Andrus Merilo, commander of the Estonian Defence Forces, revealed. He said that the goal was to establish specific plans to close the Gulf of Finland to Russian ships if necessary.
Estonia: Cooperation agreement signed with US on countering disinformation
Estonia and the US have signed a memorandum of understanding on cooperation in countering disinformation. Estonia will share with allies its experience in dealing with information attacks from Russia.
Estonia: SAS to end cooperation with Nordica
Sweden-based Scandinavian Airlines (SAS) will end its cooperation with Estonia’s Nordic Aviation Group (Nordica). SAS may cut the number of flights between Tallinn and Stockholm from six to two per day. SAS is Nordica’s largest partner.
***
LATVIA
Latvia: Government plans changes to labour taxes
The Latvian government plans to raise the personal income tax for those with high income in 2025. At the same time, the government will raise the tax-free income threshold and the minimum wage.
Latvia: Government plans to raise taxes on fuel, vices
The Latvian government plans to raise taxes on fuel and harmful vices. Under the plan, the excise tax on fuel will amount to EUR 20 per tonne of CO2 in 2026. The government will harmonise the excise duties on alcohol and tobacco products with the other Baltic States.
Latvia: State Treasury issues eurobonds for EUR 600mn
Latvia’s State Treasury has issued seven-year eurobonds worth EUR 600mn on international financial markets. In May 2024, Latvia issued ten-year US dollar bonds for USD 1.25bn.
Latvia: Government may change rules on second-tier pension funds
The Latvian government is discussing possible changes to second-tier pension funds. Meanwhile, the parliament will consider a public initiative opposing the government’s plan to cut second-tier pension contributions.
Latvia: Largest ever trade mission to US concludes visit
The largest ever Latvian trade mission to the US has concluded its visit. Economy Minister Viktors Valainis expected the mission to bring at least EUR 1bn of investments to Latvia. Altogether 70 Latvian companies took part in the visit.
Latvia: State Border Guard deploys sound devices for deterrence
Latvia’s State Border Guard has deployed high-power speaker devices on the border with Belarus to deter people from entering the country illegally. The non-lethal devices can emit sound at a volume of 80 decibels at a distance of up to 800 metres, causing great discomfort.
Latvia: Deployment of new emergency alert system delayed
A new early warning system will not be deployed in Latvia in 2024 as planned because of a delay in the procurement process, Interior Minister Rihards Kozlovskis announced. The new system could be introduced in spring 2025, he estimated. The system will enable alerts to all mobile phone users in the affected area.
Latvia: Vivi has finally received all new electric trains
Latvia’s state-owned passenger train operator, Pasazieru Vilciens (Vivi), has finally received all 32 new electric trains from Czech manufacturer Skoda Vagonka. Initially, the trains were due to be delivered by the end of 2023.
Latvia: US removes ABLV Bank from money-laundering list
The US Treasury Department’s Financial Crimes Enforcement Network (FinCEN) has removed Latvia’s ABLV Bank from its list of financial institutions posing a risk of money laundering. FinCEN noted Latvia’s reforms to prevent money laundering.
Latvia: Beer, wine adverts to be banned on radio, TV
The Latvian parliament has passed amendments to ban advertising of beer and wine on radio and TV. Currently, advertising of all other alcoholic beverages except beer and wine is prohibited in Latvia.
Latvia: Parliament freezes state support to political parties
The Latvian parliament has frozen state funding for political parties for one year. Altogether 13 parties received a total of EUR 6.65mn of support from the state budget in 2024.
Latvia: Unvaccinated boy dies of diphtheria
A four-year-old boy in Latvia has died of diphtheria. The boy was unvaccinated for the preventable disease. Health Minister Hosams Abu Meri called for stricter rules on mandatory vaccination and more restrictions on vaccination-related misinformation.
***
LITHUANIA
Lithuania: President, parties urged to stand against antisemitism
Over 150 public figures in Lithuania have signed an open letter to President Gitanas Nauseda and political parties, urging them to reject antisemitic politicians. Earlier, top politicians and Jewish community leaders warned of continuing antisemitism in Lithuania.
Lithuania: Prosecutor asks European Parliament to lift MEP immunity
Lithuania’s Prosecutor General has asked the European Parliament to strip MEP Petras Grazulis of his parliamentary immunity. Grazulis stands accused of expressing contempt for members of the LGBT community.
Lithuania: PM sceptical about state-run second-pillar pension fund
Lithuanian PM Ingrida Simonyte is sceptical about setting up a state-run second-pillar pension fund, saying that there is plenty of competition in the market. Earlier, central bank chief Gediminas Simkus suggested that people could be enrolled in a state-run second-pillar pension fund automatically.
Lithuania: Diplomatic relations established with Tonga
Lithuania has established official diplomatic relations with the Kingdom of Tonga. Until now, Tonga was one of the six remaining UN member states with which Lithuania had no diplomatic ties.
Lithuania: Northrop Grumman plans to begin producing ammunition
The Lithuanian government has signed a memorandum of understanding with US defence contractor Northrop Grumman on the production of medium-calibre ammunition in Lithuania. Defence Minister Laurynas Kasciunas said that the aim was to start production in 18 months.
Lithuania: All military units to have FPV drones: Defence Minister
The Lithuanian Armed Forces will equip all its units with FPV drones, Defence Minister Laurynas Kasciunas announced. He said that Lithuania would open several production lines for maritime drones by 2025.
Lithuania: 8,000 foreigners with residence permits for studies
Lithuania has almost 8,000 foreign students with temporary residence permits, the Lithuanian Migration Department reports. The biggest number of permits have been issued to students from India, Belarus, Pakistan, and Bangladesh.
Lithuania: Pilot scheme to combat drug use, smoking in schools
The Lithuanian government has launched a pilot scheme to combat the use of narcotics and smoking in schools. Police say that the number of minors suspected of drug-related offences is increasing in Lithuania.
Lithuania: Authorities investigating allegations on attack against Russian opposition leader
Lithuanian authorities are investigating allegations that businessman Leonid Nevzlin was behind an attack against a Russian opposition leader in Vilnius in March 2024. Poland has arrested a person allegedly involved in the attack. Nevzlin frequently attends Russian opposition meetings in Lithuania.
Lithuania: Ship with Russian chemicals not headed for Klaipeda
The Maltese-flagged ship, Ruby, carrying ammonium nitrate from Russia, is no longer headed for Lithuania’s port of Klaipeda. However, the ship may still come to Klaipeda for repairs after unloading its cargo at another port.
Lithuania: airBaltic plans to expand at Vilnius Airport
Latvia’s national air carrier, airBaltic, plans to expand its operations at Lithuania’s Vilnius International Airport. CEO Martin Gauss said that any airport within a seven-hour flight from Vilnius was a potential new destination.
***
Baltic Week is a curated free newsletter of top news from the Baltic States over the past week. You can subscribe to the weekly newsletter on Mailbrew or on your RSS feed reader. The full news and more are available on our website. We welcome any feedback.
— Read Less, Know More.