RIGA — The European Union approved a new memorandum of understanding with Latvia, paving the way for the second year of the bailout program to go into effect.
The EU’s Economic and Financial Committee, which constitutes finance ministers and central bankers from the 27 member states, approved the memorandum Wednesday, a crucial step in opening up finance for nearly bankrupt Latvia.
The approval comes after weeks of intrigue surrounding the memorandum, particularly after a last-minute effort to get parliament to empower the government to hold talks with international lenders such as the IMF and the EU.
Previously such empowerment was necessary, and the sudden need for it seemed to arise out of the endless bickering between Latvia’s troubled center-right government coalition.
Now that it has the EU’s consent, Latvia can breathe a sigh of relief – which is precisely what some ministers are doing.
Latvia's Prime Minister Valdis Dombrovskis (right) and Minister of Finance Einars Repše said the EU's decision vindicated their government's fiscal policies Wednesday.
“This proves that the government policies implemented so far were aimed at overcoming the economic crisis and those policies will continue. We have to keep working towards matching revenues with expenditure in order to balance the budget,” finance minister Einars Repše told the Baltic News Service.
The first payment — some €500 million from the EU — is expected to be made next month. The largest sum, or €1 billion, will come from the Scandinavian countries.
Latvia is expected to receive €2.7 billion this year, on top of the €3.3 billion it has received so far.
The original, three-year emergency bailout program signed in Dec. 2008 calls for a total €7.5 billion, though at the time the government said it hoped not to use the entire sum.
Prime Minister Valdis Dombrovskis was quoted Wednesday as saying that Latvia could begin that as soon as there is a surplus in the national budget. He did not specify when this will be possible.
Earlier this week State Auditor Ingrida Sudraba said Latvia would not be able to begin returning funds to international lenders in 2012, as currently planned.
EU gives up because they don´t have another way. There will be enough of problems of keeping entire eurozone in one piece. So it´s just the simpliest way to pay now instead of continue screwing the balls of Dombrovskis and Repse. They also have been so humble slaves to IMF – maybe showing their butt to people of Latvia same time – and it is good to give something back. The truth is this country cannot start paying back in near future because nobody can see the plans of recovery. Pumping money to black hole called Parex and “stabilizing the economy” but what else? Starting to invest infrastructure, energy section, putting down the old Soviet bureaucracy (I know it will be very hard to give away all those rubber stamps). Focusing on efficiency instead of just cut, cut, cut without some real destination. Sometimes cuttings looks like making a scary-shit, and hiding the head into bush. We need some real plans of education, medical health, pensioners, boosting industry and export…instead of licking IMF and other ones just because we have to get money.
More is in you Sebastian brooks!
Looking from outside is not to be responsebel inside the country.
The goverments team is on speaking times on the good way.
And yes Latvia need some real plansof education,medecal he