RIGA — The board of the International Monetary Fund has approved another tranche of its bailout loan to Latvia, commending the country for implementing the economic recovery program and a “better-than-expected” budget performance last year.

The IMF board approved the tranches, [private_supervisor]worth €203 million, on Wednesday, as part of the lender’s €1.7 billion total pledge to Latvia made at the end of 2008.

Most importantly for Latvia, the Washington-based institution noted the progress made by the Baltic state during 2009 and suggested there was cause for optimism that the recovery program would succeed.

“While conditions remain quite difficult, there are signs that the Latvian economy is beginning to bottom out with hope for a recovery late this year and into 2011, and financial markets have calmed considerably. The current account has turned positive and previously high inflation is being reversed,” the IMF said.

The fund also pointed out that wages are falling (making Latvian goods and services more competitive), and exports increased 6 percent in the third quarter last year.

Takatoshi Kato, deputy managing director of the IMF’s executive board, said that passage of the 2010 budget further strengthened the program’s integrity, but he warned that Latvia was not out of the woods yet.

“Nevertheless, Latvia continues to experience extremely challenging economic circumstances. Output has shrunk substantially, more than a fifth of the workforce is unemployed, and the downturn has eroded government revenue,” he said in a statement.

Kato stressed the importance that the government undertook “rigorous execution” of this year’s budget — e.g., refrained from cutting taxes or increasing spending.

Indeed, large tax cuts — which are being proposed by politicians such as Ainars Šlesers, Riga’s deputy mayor who has his eye on the prime minister’s post, and People’s Party’s leader Andris Šķēle — could undermine the recovery program agreed upon with the IMF and the EU.

Both politicians have strongly criticized Prime Minister Valdis Dombrovskis for the tax increases (even though both their parties essentially approved the increases) and have suggested on numerous occasions an economic recovery program centered on tax cuts.

[/private_supervisor] [private_subscription 1 month]worth €203 million, on Wednesday, as part of the lender’s €1.7 billion total pledge to Latvia made at the end of 2008.

Most importantly for Latvia, the Washington-based institution noted the progress made by the Baltic state during 2009 and suggested there was cause for optimism that the recovery program would succeed.

“While conditions remain quite difficult, there are signs that the Latvian economy is beginning to bottom out with hope for a recovery late this year and into 2011, and financial markets have calmed considerably. The current account has turned positive and previously high inflation is being reversed,” the IMF said.

The fund also pointed out that wages are falling (making Latvian goods and services more competitive), and exports increased 6 percent in the third quarter last year.

Takatoshi Kato, deputy managing director of the IMF’s executive board, said that passage of the 2010 budget further strengthened the program’s integrity, but he warned that Latvia was not out of the woods yet.

“Nevertheless, Latvia continues to experience extremely challenging economic circumstances. Output has shrunk substantially, more than a fifth of the workforce is unemployed, and the downturn has eroded government revenue,” he said in a statement.

Kato stressed the importance that the government undertook “rigorous execution” of this year’s budget — e.g., refrained from cutting taxes or increasing spending.

Indeed, large tax cuts — which are being proposed by politicians such as Ainars Šlesers, Riga’s deputy mayor who has his eye on the prime minister’s post, and People’s Party’s leader Andris Šķēle — could undermine the recovery program agreed upon with the IMF and the EU.

Both politicians have strongly criticized Prime Minister Valdis Dombrovskis for the tax increases (even though both their parties essentially approved the increases) and have suggested on numerous occasions an economic recovery program centered on tax cuts.[/private_subscription 1 month] [private_subscription 4 months]worth €203 million, on Wednesday, as part of the lender’s €1.7 billion total pledge to Latvia made at the end of 2008.

Most importantly for Latvia, the Washington-based institution noted the progress made by the Baltic state during 2009 and suggested there was cause for optimism that the recovery program would succeed.

“While conditions remain quite difficult, there are signs that the Latvian economy is beginning to bottom out with hope for a recovery late this year and into 2011, and financial markets have calmed considerably. The current account has turned positive and previously high inflation is being reversed,” the IMF said.

The fund also pointed out that wages are falling (making Latvian goods and services more competitive), and exports increased 6 percent in the third quarter last year.

Takatoshi Kato, deputy managing director of the IMF’s executive board, said that passage of the 2010 budget further strengthened the program’s integrity, but he warned that Latvia was not out of the woods yet.

“Nevertheless, Latvia continues to experience extremely challenging economic circumstances. Output has shrunk substantially, more than a fifth of the workforce is unemployed, and the downturn has eroded government revenue,” he said in a statement.

Kato stressed the importance that the government undertook “rigorous execution” of this year’s budget — e.g., refrained from cutting taxes or increasing spending.

Indeed, large tax cuts — which are being proposed by politicians such as Ainars Šlesers, Riga’s deputy mayor who has his eye on the prime minister’s post, and People’s Party’s leader Andris Šķēle — could undermine the recovery program agreed upon with the IMF and the EU.

Both politicians have strongly criticized Prime Minister Valdis Dombrovskis for the tax increases (even though both their parties essentially approved the increases) and have suggested on numerous occasions an economic recovery program centered on tax cuts.[/private_subscription 4 months] [private_subscription 1 year]worth €203 million, on Wednesday, as part of the lender’s €1.7 billion total pledge to Latvia made at the end of 2008.

Most importantly for Latvia, the Washington-based institution noted the progress made by the Baltic state during 2009 and suggested there was cause for optimism that the recovery program would succeed.

“While conditions remain quite difficult, there are signs that the Latvian economy is beginning to bottom out with hope for a recovery late this year and into 2011, and financial markets have calmed considerably. The current account has turned positive and previously high inflation is being reversed,” the IMF said.

The fund also pointed out that wages are falling (making Latvian goods and services more competitive), and exports increased 6 percent in the third quarter last year.

Takatoshi Kato, deputy managing director of the IMF’s executive board, said that passage of the 2010 budget further strengthened the program’s integrity, but he warned that Latvia was not out of the woods yet.

“Nevertheless, Latvia continues to experience extremely challenging economic circumstances. Output has shrunk substantially, more than a fifth of the workforce is unemployed, and the downturn has eroded government revenue,” he said in a statement.

Kato stressed the importance that the government undertook “rigorous execution” of this year’s budget — e.g., refrained from cutting taxes or increasing spending.

Indeed, large tax cuts — which are being proposed by politicians such as Ainars Šlesers, Riga’s deputy mayor who has his eye on the prime minister’s post, and People’s Party’s leader Andris Šķēle — could undermine the recovery program agreed upon with the IMF and the EU.

Both politicians have strongly criticized Prime Minister Valdis Dombrovskis for the tax increases (even though both their parties essentially approved the increases) and have suggested on numerous occasions an economic recovery program centered on tax cuts.[/private_subscription 1 year]

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