Latvia pleased to secure EU cash promise
The Latvian government breathed a collective
sigh of relief Tuesday when European Union finance ministers meeting in
Brussels approved payment of the EU's 3.1-billion-euro (4-billion- dollar)
slice of a 7.5-billion-euro (9.7-billion-dollar) economic assistance package
brokered by the International Monetary Fund (IMF), dpa
The funds for Latvia will be available in six instalments paid over three years, with the first loan of one billion euros (1.3 billion dollars) available in March, provided the Latvian government is able to keep its part of the bargain by completing the introduction of a hard-hitting austerity package.
Key measures include the cutting of all public sector wages by 15 per cent in 2009 and raising income tax from 18 to 21 per cent.
The unpopularity of the measures was one element that led to a mass protest rally in the Latvian capital, Riga, on January 13 which turned into a riot with more than 100 arrested.
After a decade of spectacular economic growth, the Latvian economy all but collapsed during 2008 and is expected to shrink by around 5 per cent in 2009.
Latvian Finance Minister Atis Slakteris said his country's accession to the EU in 2004 could be thanked for the arrival of the bailout money.
"Integration into the EU has allowed Latvia to maintain a stable national currency during this rough period and guide the economy towards recovery," he said.
Slakteris has endured fierce domestic criticism and even became the subject of ridicule after an ill-advised television appearance in which he gave less than convincing answers to questions about the national economy.
His answer to the question of what went wrong - "Nothing special" - has become a popular catchphrase in the Baltic country.
In addition to the EU money, the IMF will lend Latvia 1.7 billion euros (2.2 billion dollars), with further contributions from the World Bank, the European Bank for Reconstruction and Development, and the Nordic nations of Sweden, Denmark, Finland and Norway.
But as far as many Latvians are concerned, the smallest donors are the most significant. The fact that fellow former communist states the Czech Republic, Poland, and particularly neighbouring Estonia will provide 100 million euros each is a source of widespread embarrassment.
"I go to (the Estonian capital) Tallinn every couple of weeks. Now the first thing they ask me is if I have spent all their money yet," Ilmars, a Latvian delivery driver told Deutsche Presse-Agentur dpa.