At the same time, the representatives of the Bank of Latvia note that the Bank of Latvia closed the year 2023 with better financial results than previously predicted, taking into account the global geopolitical and economic developments, under the influence of which the European Central Bank significantly raised interest rates with the aim of limiting inflation in the Eurozone.
Among them, the Bank of Latvia mentions that by successfully managing the gold and financial investments of the Bank of Latvia, their value was increased by 298 million euros or 5% during the year. As a result, the total capital and reserves of the Bank of Latvia increased by 143 million euros or 24% and reached 730 million euros at the end of the year.
On the other hand, when the European Central Bank raised interest rates, the expenses of the Bank of Latvia for deposits increased significantly. Interest expenses on deposits of Latvian credit institutions reached 174 million euros, and on deposits of the Latvian government – 45 million euros.
“Taking into account the aforementioned increase in interest expenses, the Bank of Latvia closed the year 2023 with a loss of EUR 54 million, which, in accordance with the Law on the Bank of Latvia, was covered from the reserve capital created for such cases. The losses do not reduce the central bank’s ability to implement an effective monetary policy and do not cause expenses for the state,” he emphasizes representatives of the Bank of Latvia.
The Bank of Latvia credited 58 million euros to the state budget last year, including 45 million euros as interest on government deposits in the central bank and 13 million euros in taxes.
Latvijas Banka states that similar financial results are expected for many other central banks, as they are basically related to the performance of the main task of central banks – the creation and implementation of monetary policy – in conditions where decisive action is needed to slow down rapid price growth. It is expected that the Bank of Latvia and other central banks will return to profit making in the medium term as the stance of monetary policy changes and interest rates decrease.
The Bank of Latvia also notes that the main task of central banks is the implementation of monetary policy, not profit making.
“The year 2023 was productive and effective for the Bank of Latvia,” says Mārtiņš Kazāks, president of the Bank of Latvia.
He mentions that a safe and developed financial sector, better access to financial services and an honest customer-friendly banking sector is a direction of activity in which much has been done and will continue to be worked on in the future.
“The dragon of inflation has been pushed to the ground, and it will soon be possible to start a gradual reduction of interest rates. The foundations have been laid for a new cycle of economic growth to begin in 2024,” says the president of the Bank of Latvia.
The Board of the Bank of Latvia has approved the 2023 annual report of the Bank of Latvia. In accordance with the Law of the Bank of Latvia, the financial statement was audited by independent external auditors recommended by the Council of the European Central Bank and approved by the Council of the European Union. Latvijas Banka has received a positive opinion on its 2023 financial report from the auditor SIA “Ernst & Young Baltic”.
It has already been announced that the Bank of Latvia did not make a profit in 2022 and did not suffer losses either, that is, the result of its operation was 0.
