Latvia dodges bankruptcy with late budget cuts

Source: Agencies | June 13, 2009, Saturday |

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LATVIA'S prime minister said yesterday that the country has been saved from bankruptcy after last-minute budget cuts paved the way for the Baltic country to receive funds from international lenders.

Valdis Dombrovskis told Latvian public radio that the government's decision late Thursday to slash 500 million lats (US$1 billion) in budget expenses was "very difficult" but necessary if Latvia wants the next installment in a 7.5 billion lat bailout plan agreed in December.

"Yesterday's (Thursday) decisions saved the country from bankruptcy," Dombrovskis said.

Parliament will review and vote upon the budget changes next week.

Officials from the European Union had indicated that Latvia would get the next loan installment, worth 1.2 billion euros (US$1.7 billion), in the near future if the government cut expenses and lowered the budget deficit.

Latvia's economy, the hardest-hit in the 27-member EU, is likely to shrink by 18 percent this year.

Economy

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Latvia dodges bankruptcy with late budget cuts

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