IMF confirms 1.7 bln euro loan to crisis-hit Latvia

Special Report:Global Financial Crisis
RIGA, Dec. 23 (Chinese media) -- The International Monetary Fund (IMF) Wednesday announced a loan of 1.7 billion euros (2.4 billion U.S. dollars) to Latvia to ease the economic recession in this crisis-hit country , according to Latvian finance ministry.

A group of international lenders pledged 7.5 billion euros (10.5 billion U.S. dollars) to Latvia, while the European Union provided a loan of 3.1 billion euros (4.33 billion U.S. dollars), the World Bank 400 million euros (558.8 million U.S. dollars), the Nordic states 1.8 billion euros (2.51 billion U.S. dollars), the European Bank for Reconstruction and Development 200 million euros(279.4 million U.S. dollars) and Poland, Czech, Estonia confirmed 100 million euros (139.7 million U.S. dollars) respectively, the finance ministry said.

The international aid will be allocated to the country in the coming three years, to mainly cover the budget deficit, ensure the stability of the country's financial system, pay back debts and restore economic competitiveness, the finance ministry said.

The money will be used strictly in accordance with the budget expenditure, said Finance Minister Atis Slakteris.

The country's debt must be constrained within 50 percent of its GDP, which is one criteria for entering the euro zone, he added.

Embracing years of fast growth, Latvia's economy has suffered a dramatic downturn this year with the negative growth of the third quarter surpassing 4 percent. The current global financial crisis made it even worse.

The Baltic state sought economic rescue from the IMF and European Union last month and set out to draw up plans to ease the hard-hit economy.

Early this month, the Latvian parliament urgently passed a range of reform measures, including raising the value added tax and shrinking the budget for 2009 in an effort to cut spending and raise revenues.

The IMF, European Union and other European countries then granted crisis lending to Latvia one after another.

The international institutions showed their trust in the government's ability to ensure the stability of the nation's economy, Slakteris said.