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Nov 20, 2008, 15:56 GMT

Latvia in talks with IMF on possible bail-out plan

Riga - Latvian Prime Minister Ivars Godmanis authorized his finance minister, Atis Slakteris, to contact the International Monetary Fund (IMF) about a possible stabilization package Thursday. Godmanis refused to say how much Slakteris would be asking for from the IMF in his attempts to rescue an economy that is sliding into a deep recession. Anonymous government sources quoted in Latvian newspaper Diena said the approach to the IMF was more of a contingency measure than an emergency measure, and would lay the groundwork for any specific future requests. A Finance Ministry spokesperson confirmed that other international bodies had also been contacted as possible sources of cash, including the European Union. Latvia's economy is experiencing a sharp downturn after years of strong growth. Godmanis' government, which has been in power for a little more than a year, recently unveiled a series of austerity measures designed to bring public finances under control, with hundreds of public sector workers losing their jobs. With domestic demand sharply down too, jobs are also being shed in the private sector. Earlier this month, the Latvian government was forced to nationalize the largest local bank, Parex, at a cost of 350 million dollars. Latvia would be the second EU member state to seek an IMF bail-out. Hungary has already secured a 25 billion dollar package, but given the relatively small size of Latvia's economy, it would be unlikely to seek a similar amount.

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