Get the latest updates as we post them — right on your browser

. Last Updated: 07/27/2016

Latvia to Request IMF Standby to Boost Reforms

RIGA, Latvia -- Latvia will request a 13-month International Monetary Fund standby loan this week, intended to give its economic reform policies credibility but not to provide new funds, government and IMF officials say.

"The cabinet should make a formal request to the IMF after it meets next Tuesday," a government spokesman said.

A standby facility is money set aside for a country as a potential loan. If the country adheres to certain performance benchmarks, funds can be released from the facility in tranches, depending on the country's needs and progress.

Both IMF and Latvian officials said the granting of the standby should proceed smoothly.

The standby would give Latvia automatic access to loans but, in the true spirit of the standby concept, funds would not be drawn, said IMF resident representative Jukka Paljarvi.

"For Latvia, it is useful to have the line of credit and the government will be committed to a program that adds to the credibility of the country," he said.

This view was shared by Inguna Sudraba, state secretary in charge of the budget at the Finance Ministry.

"They [the IMF] come with strong hands and make many demands that make it easier for us to work with those who want things we can't afford, such as a higher minimum wage," she said.

Paljarvi said the fund expected to see 3.0 to 5.0 percent real GDP growth in 1995 after a 2.0 percent rise in 1994.

Provisional returns for 1994 showed a large trade deficit and a slightly smaller surplus on invisible earnings, giving Latvia a current account deficit for the first time.