Bloomberg News

Latvia Agrees on Budget Cuts With IMF, EU as Bailout Winds Down

December 09, 2011

Dec. 8 (Bloomberg) -- Latvia agreed with the International Monetary Fund and the European Commission to cut its 2012 budget gap as the Baltic nation’s 7.5 billion-euro ($10.1 billion) bailout program organized by the two lenders draws to a close.

Completion of the fifth and final review of the lending program “will unlock remaining tranches of support from both institutions,” the Washington-based IMF said today in an e- mailed statement. “However, given its strong financial position, the Latvian government does not intend to draw the funds available to them.”

Latvia turned to a group led by the IMF and the Commission in late 2008 after its second-biggest bank needed a state rescue and a real-estate bubble burst. Next year’s budget envisages a deficit of 2.5 percent of gross domestic product, which would enable Latvia to adopt the euro in 2014. Parliament began debating the plan today.

The IMF’s share of the loan program ends this month, with the Commission’s part to follow in January.

--Editors: Andrew Langley, Douglas Lytle

To contact the reporter on this story: Aaron Eglitis in Riga at aeglitis@bloomberg.net

To contact the editor responsible for this story: Balazs Penz at bpenz@bloomberg.net


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