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Brussels, 21 December 2011
Signature of the fifth Supplemental Memorandum of Understanding (SMoU) related to the EU financial assistance to Latvia
On 21 December 2011, a new Supplemental Memorandum of Understanding (the fifth SMoU) related to the EU financial assistance to Latvia was signed by Vice President of the European Commission Olli Rehn and the Latvian authorities. This follows a positive assessment by the Commission of the implementation of the economic adjustment programme. It is the last Memorandum under the Balance-of-Payments assistance programme with Latvia and it reflects the successful finalisation of the international assistance programme that is set to expire on 20 January 2012.
During the duration of the programme, from early 2009 to date, Latvia has made remarkable progress in overcoming the worst financial and economic crisis in its recent history. In spite of social hardship, periods of political change and an uncertain external environment, the country is now in a much sounder position: economic growth has resumed after the unprecedented fall in 2008 and 2009; inflation rates are much lower than before the crisis; the pre-crisis external imbalances have been greatly reduced; unemployment, that rose strongly during the crisis, is now steadily declining; access to international funding markets has been regained, though recent tensions in international capital and sovereign markets have added new challenges; and the fixed exchange rate has been preserved.
Signing of the Supplemental Memorandum of Understanding opens a possibility for a disbursement of up to EUR 200 million, which, however, the authorities intend not to request, given the current sound financial position of Latvia. Upon expiration of the programme in January 2012, Latvia will be subject to post-programme surveillance. The purpose of the post-programme surveillance is to ensure the capacity to repay EU assistance in the aftermath of the programme, by closely monitoring developments in a country, and to provide a framework for smooth phasing out of the programme, allowing consolidation of progress made under the programme.
For more information and the full text of the latest SMoU, see the link to the webpage on the Balance-of-Payment assistance for Latvia: