Brussels, 27 July 2009
Joint statement by the Commission and the Presidency of the EU on the disbursement of the 2 nd instalment of the Balance of Payment loan assistance to Latvia
The EU disbursed today €1.2 billion to Latvia, its second instalment in the context of the Balance of Payment loan assistance granted to Latvia in January this year. It now looks forward to Latvia fulfilling the conditions for further instalments. They are established in the Memorandum of Understanding (MoU), as well as in the Supplemental MoU signed by the EU and the Latvian authorities on 13 July.
The EU disbursed today €1.2 billion to Latvia, its second instalment in the context of the Balance of Payment loan assistance granted to Latvia in January this year. It now expects Latvia to fulfil the conditions for further instalments. They are establish ed in the Memorandum of Understanding (MoU), as well as the Supplemental MoU which has been signed by the EU and the Latvian authorities on 13 July.
The EU welcomes the progress made on the Letter of Intent between the IMF staff and Latvia. These developments and the continued strong support by the EU - as also indicated by the European Council last June - provide Latvia with the financial and political confidence to undertake the necessary budgetary and economic adjustment and structural reforms over the next months and years.
The Latvian government should now implement fully the consolidation in 2009, as planned in the supplementary budget adopted in June, to reach a general government deficit below 10 % of GDP in ESA terms, and swiftly implement additional measures if needed. It should work quickly and with resolution on the identification of the additional measures to be included in the 2010 budget – amounting to at least 500 million lats – so as to adopt a 2010 budget with sustainable measures consistent with the consolidation path, i.e. achieving a deficit of no more than 8.5% of GDP in ESA terms.
All these actions are necessary to enhance medium term prospects for employment and income for the Latvian people, to ensure sustainable growth and the catching up of the economy, to address its severe imbalances, including competitiveness, and to safeguard medium term sustainability of Latvia's external position, thereby ensuring the viability of the program and the capacity of Latvia to repay international donors.
With these objectives in mind, the EU will continue to work closely with the Latvian authorities and the IMF to ensure that Latvia implements successfully its economic reform program and its timely repayment of all loans associated with the international program to support Latvia.
For more information see the link to the webpage on the Balance-of-Payment assistance for Latvia