The European Union on Wednesday paid the first instalment of its 3.1-billion-euro (4-billion-dollar) loan to cash- strapped Latvia, even as the Baltic state struggled to form a government which could spend it,
dpareported.
In a statement, the EU executive in Brussels said it had transferred 1 billion euros to Riga, several days ahead of schedule.
The instalment is part of an assistance package worth 7.5 billion euros put together by the EU, the IMF, the World Bank and seven European countries, including Sweden, Denmark, Norway and Estonia.
Wednesday's payment comes at a time in which Latvia is without a government and facing growing concerns over its ability to repay its debt.
In January, EU finance ministers agreed to help Latvia weather the global credit crunch on condition that Riga approve unpopular reforms designed to get its battered economy back on track.
"Everyone should be clear that this support is subject to Latvia implementing its programme of economic and budgetary adjustment," said Joaquin Almunia, the EU's economic and monetary affairs commissioner.
"We expect the new government to commit fully to the programme," Almunia said. Latvian President Valdis Zatlers is expected to nominate a new premier on Thursday.
Latvia's gross domestic product (GDP) is expected to drop by at least 10 per cent this year, while its budget deficit is expected to abundantly exceed 6 per cent of GDP.
Public anger at spending and wage cuts and a perceived lack of accountability from politicians led to riots in the streets of the small Baltic nation on January 13 and a blockade by farmers on February 3.
Latvian Prime Minister Ivars Godmanis resigned on Friday amid growing infighting within his centre-right coalition.