LATVIA’s Cabinet of Ministers has approved the Transport Ministry's plans to redistribute €26m of state funding to Latvian Railways (LDz) to cover losses recorded in 2024.
The Ministry says that European Union (EU) and Latvian transport industry regulations requires the state to ensure the financial stability of the state railway while Latvia’s transport minister, Atis Schwinki, says the funding is needed to ensure uninterrupted passenger operation.
“We also need to take certain steps aimed at strengthening national security, in which railways are critical,” Schwinki says.
In recent years, LDz has seen noticeable operational improvements and Schwinki expects the need for supplementary funding to reduce upon the completion of a programme of sector reforms initiated by ministry. Indeed, LDz has already reported savings of €7m during the first five months of 2025.
Freight woes
Like other Baltic countries, rail freight volumes have dropped sharply in Latvia as transit between Russia and Europe ceased following the Russian invasion of Ukraine in 2022. In 2024, only 11.5 million tonnes of freight was transported in Latvia compared with 40 million tonnes in 2019.
LDz has been loss-making since 2021, according to official information, with only limited success with efforts to compensate for the losses by carrying freight to from Central Asia and Central Europe.
With political tensions with Russia and Belarus looking unlikely to be resolved in the coming years, Latvian politicians have been calling for the Transport Ministry to undertake a comprehensive restructuring of LDz, particularly its part servicing the infrastructure that is currently unused.
"It is obvious that this eastern direction will not be functional in the long term, which means that LDz needs to be restructured,” Arvils Aseradens, Latvia’s finance minister, said earlier this year. “We are trying to find a solution to minimise the need for subsidies.”
