EU – Baltic States, Financial Services, Latvia, Legislation, Loan

The government decision was taken in November 2008, and a few weeks later the first mission of IMF experts arrived in Latvia to agree the conditions of the loan, writes LETA.

The first round of talks between the lenders and the Latvian government ended without success when the IMF mission suddenly interrupted its work and fled to Lithuania. After one of the members of the mission received an SMS containing a threat, the IMF decided it was necessary to act immediately and evacuate its experts from Riga. After leaving Latvia with great haste, the mission decided to relocate to Warsaw and continue the talks from there.

Former Prime Minister Godmanis was shocked at the IMF's decision. "I was in the countryside, and he [mission director Rosenberg] called me from the airport. When I said that I would activate all the national security structures which Latvia had available, nevertheless I received the answer that the decision had already been taken and that they would continue to work from Warsaw."

At the time, one explanation for the threats was that they were linked with the possible takeover of Parex banka. At the end of November, the Latvian government received a letter from the IMF suggesting that the owners of Parex banka be fully excluded from the running of the bank, as well as being prevented from removing their assets. At the time, there was also a perceived threat to officials of the Financial and Capital Market Commission, with commission head Irena Krumane placed under protection for a short time.

Godmanis explained that it had been impossible to establish who had sent the threatening SMS. "At that time I was somewhat in a state of despair, as how were we to continue the talks? We were told that work would continue on the memorandum, that they would do this in Warsaw and put in great efforts to make it back," said the former premier. Serious discussions had to take place with the embassies of several countries before the mission could be persuaded to return to Latvia.

While in Latvia this incident, which could have frustrated talks over a very important loan, has not until now been publicized, at the IMF's headquarters in Washington it is still mentioned, and the country's name was being presented in a less than favorable light in informal conversations at the fund's summit last week.