Latvia and EC signed Supplemental Memorandum of Understanding

On Tuesday, July 20, as the international loan programme review mission was successfully closed, the Commissioner for Economic and Monetary Affairs of the European Commission Olli Rehn signed the new Supplemental Memorandum of Understanding between the European Union and Republic of Latvia. According to the payment schedule of the international loan programme in September Latvia will receive the next payment from the European Commission amounting to 200 million euro.
 
“The signed Memorandum with the European Commission is the outcome of government’s work, as well as a proof that Latvian economy stabilises. Implementation of fiscal policy is aimed at budget deficit reduction to ensure fastest possible recovery of the economy and improvement of competitiveness in international markets. Despite the already reached achievements we have to continue targeted work to reduce excessive state budget deficit,” underlined the Minister of Finance Einars Repše.

On the Latvian side the Supplemental Memorandum of Understanding was signed by the Prime Minister Valdis Dombrovskis, Minister of Finance Einars Repše, Governor of the Bank of Latvia Ilmārs Rimšēvičs, and Chairwoman of the Financial and Capital Market Commission Irēna Krūmane.

Within the framework of international loan programme, agreed with the Saeima on the basis of Economic Stabilisation and Growth Revival Programme, till the end of 2011 Latvia will have an access to 7.5 billion euro loan. The Programme envisages further implementation of tight fiscal policy and structural reforms in Latvia to return the economy back on the growth path.

As it was announced before, within the framework of the review mission international lenders conceptually agreed that during the international loan programme Latvia will use only resources provided by institutional lenders – International Monetary Fund (IMF), European Commission and World Bank. The financing planned from European countries will be used by Latvia as an overdraft in case of necessity.

According to agreements the available resources will be used to ensure general financing of the state budget, i.e. financing of state budget deficit and loan, re-financing of the government debt.

This week at the meeting of the IMF Board it is also pl anned to approve the Letter of Intent of the Republic of Latvia to the IMF.