IMF provides another loan tranche of 105,8 mln euros to Latvia
WASHINGTON. August 13. KAZINFORM The International Monetary Fund (IMF) is providing to Latvia another loan tranche of 105.8 million euros (135.6 million US dollars). This decision was made on the results of the third review of the fulfilment of the anti-crisis economic programme of the Latvian authorities pursued on agreement with the Fund. The total volume of resources provided by the IMF in support of this programme will reach as a result 1.15 billion euros (1.48 billion US dollars); Kazinform refers to Itar-Tass.
The IMF said in a press release on Thursday that on July 21, 2010, the Executive Board of the International Monetary Fund (IMF) concluded the 2010 Article IV consultation with the Republic of Latvia and completed the Third Review of the country's performance under an economic program supported by a Stand-By Arrangement (SBA). Completion of the review makes available an amount equivalent to SDR 90 million (about €105.8 million or US$135.6 million), bringing total disbursements under the SBA to SDR 982 million (about €1.15 billion or US$1.48 billion).
According to the IMF, Latvia's economy grew extremely rapidly for a number of years through 2007. Capital inflows, including from foreign parent banks, and expansionary macroeconomic policies pushed up growth, but also fuelled unsustainable credit and housing bubbles, as well as a current account deficit above 20 percent of gross domestic product (GDP). The combination of these bubbles unwinding, the global financial crisis, and acute banking pressures in Latvia contributed to a crisis in late 2008 and eventually to an 18 percent output contraction in 2009-the largest in the world. In November 2008, with deposit withdrawals putting pressure on international reserves and the fiscal position deteriorating due to a steep drop in revenue as well as mounting banking costs, Latvia approached the Fund and European Commission for emergency financial support.