The material on this site is for financial institutions, professional investors and their professional advisers. It is for information only. Please read our Terms & Conditions, Privacy Policy and Cookies before using this site. Please see our Subscription Terms and Conditions.

All material subject to strictly enforced copyright laws. © 2022 Euromoney, a part of the Euromoney Institutional Investor PLC.

Baltics: Latvia laments boom-bust cycle

Dramatic fall in growth; Bankruptcy looms without bailout funds

John Lipsky, IMF

"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. The government hopes these measures will clear the way for the second €1.2 billion portion of a total €7.5 billion aid package from the multilaterals.

The latest economic data for the embattled Baltic republic make for grim reading, with GDP shrinking by a huge 18% in the first quarter, the worst performance by any member state of the EU. According to Lars Christensen, chief emerging market analyst at Danske Bank in Copenhagen, economic developments "clearly indicate that a worst-case scenario for Latvia’s medium-term outlook has become a reality".

You have reached premium content. Please log in to continue reading.

Read beyond the headlines with Euromoney

For over 50 years, our readers have looked to Euromoney to stay informed about the issues that matter in the international banking and financial markets. Find out more about our different levels of access below.


Unlimited access to and

Expert comment, long reads and in-depth analysis interviews with senior finance professionals

Access the results of our market-leading annual surveys across core financial services

Access the results of our annual awards, including the world-renowned Awards for Excellence

Your print copy of Euromoney magazine delivered monthly

£73.75 per month

Billed Annually


Unlimited access to and, including our top stories, long reads, expert analysis, and the results of our annual surveys and awards

Sign up to any of our newsletters, curated by our editors


Already a user?

We use cookies to provide a personalized site experience.
By continuing to use & browse the site you agree to our Privacy Policy.
I agree