Latvia continues efforts to win new deal from IMF (Roundup)

Riga - Latvia's Finance Minister Einars Repse travelled to Washington Wednesday as part of an effort to win revised terms for a 7.5-billion-euro (9.7-billion-dollar) bail-out package brokered by the International Monetary Fund (IMF). Repse was due to visit the IMF and World Bank as part of an annual Spring meeting between the institutions taking place in the US capital April 25-26. 'The Latvian delegation will inform other participants about the current economic situation in the country, as well as about prepared proposals regarding budget amendments and structural reforms to overcome the existing situation,' a Foreign Ministry spokesman told the German Press Agency dpa. Repse also plans to meet with US State Department representatives, the ministry confirmed. Repse's departure came just hours after the Latvian government outlined a future of enormous spending cuts as the embattled Baltic state struggles to meet economic criteria laid down by the IMF. Speaking after a lengthy meeting of the cabinet on Tuesday, Repse said the situation 'forces us to look into expenses we promised to leave untouched earlier.' Those expenses are likely to include politically sensitive items such as pensions and healthcare, which had been partially shielded during earlier rounds of cutbacks. Previously announced wage reductions of 20 per cent for public sector workers have already sparked demonstrations by doctors, teachers and police officers. Further cuts will prove even less popular, raising the pressure on the five-party coalition government which has only been in power since mid-March. Repse indicated that Latvia's contributions to the European Union and NATO could be reduced and expressed hope he could renegotiate the terms of the economic aid package brokered by the IMF. One of the main conditions of the deal was that Latvia would limit its 2009 budget deficit to 5 per cent of GDP, but even by cutting budget expenditure by 40 per cent, Latvia would still have a budget deficit of more than 7 per cent, Repse said. Latvia has already missed out on one 200-million-euro payment from the IMF because of its inability to get reforms in place quickly enough and it risks missing a one-billion-euro payment due in June that would send the country to the verge of bankruptcy, according to earlier statements by Prime Minister Valdis Dombrovskis. However, Repse claimed Latvia could manage even if the IMF refused to pay up, though he admitted the result would be yet another round of cuts. After years of strong growth since it won its independence from the Soviet Union in 1991, Latvia's economy imploded in 2008. Official estimates say GDP will shrink by at least 13 per cent in 2009, the largest projected contraction in the EU.