EU – Baltic States, Financial Services, Latvia

Godmanis, however, did not reveal the amount of the aid that Latvia wishes to receive, he said that it would depend on the results of the talks, reports LETA.

As reported, the newspaper Diena wrote today that this should not be regarded as Latvia officially turning for financial help to the IMF and the European Commission, as a number of countries have done already, including Hungary, Ukraine and Serbia. The government will not seek help because the situation is not that critical in Latvia, it will rather be a decision on launching necessary preparatory work for evaluating the options for borrowing money from the IMF and the Commission if the economic situation declines in Latvia and the world, as government sources told the newspaper.

According to the Finance Ministry's spokeswoman Diana Berzina, there have already been informal consultations with international institutions, including the European Commission, regarding loans for Latvia.

The interest on loans provided by the Commission and the IMF is lower, and the repayment term longer than with other loans. There are certain preconditions for the IMF and the Commission's loans, the money that a government borrows from the IMF or Commission must not be used to cover public administration or national budget expenditures. The Commission, the IMF and the World Bank, upon issuing a loan to a government usually also set a number of requirements, for instance, limiting government expenditures, carrying out structural reforms, strengthening the competitiveness of the national economy, and others.