Baltics: Latvia laments boom-bust cycle

“We will continue to work closely with the Latvian authorities” John Lipsky, IMF

Latvia faces a summer of discontent following the admission by prime minister Valdis Dombrovskis that without further financial assistance the Baltic republic faces the real possibility of collapsing into bankruptcy. Dombrovskis says that Latvia will probably be unable to pay pensions and wages by August unless it receives further help from international donors. In an attempt to secure much-needed funds from a range of lenders such as the EU and the IMF, in late June the Latvian parliament approved sweeping budget cuts to the 2009 budget of Lats500 million ($994 million), including pension and public-sector salary reductions.