Uh oh. This can’t be good.
From Reuters (our emphasis):
RIGA, July 15 (Reuters) - The International Monetary Fund has put forward new, difficult conditions for Latvia to receive further loans, the prime minister said on Wednesday in a further sign the Fund is being tougher than the European Commission.
Latvia has already got agreement from the European Union for a further 1.2 billion euros of funding. The IMF has yet to agree on a tranche of 200 million euros it delayed from earlier this year. The loans are part of a 7.5 billion euro rescue package. “It has to be admitted the talks are fairly difficult and the conditions the IMF are proposing are also fairly difficult,” Prime Minister Valdis Dombrovskis told public radio.
He declined to say what conditions the IMF wanted for its granting of further loans but said they were new conditions. A joint team from the IMF and European Commission are in Latvia to hold talks with the government. Speaking on LNT television, Dombrovskis said the IMF wanted to achieve a rapid reduction of the budget deficit, expected to reach 10 percent of gross domestic product (GDP) this year. He did not say whether the IMF agreed or disagreed with the pace of deficit reduction Latvia has agreed with the EU, which aims at reducing the funding gap to 3 percent of GDP by 2012 in preparation for eventual adoption of the euro.
“To achieve this (deficit reduction) various proposals have been put forward and it is about these proposals that we are talking,” he said.
We already know the the topic of the Latvian budget has been unexpectedly added to the EcoFin agenda.
So what could those proposals be?
Related links:
The IMF/EU Commission rift on Latvia deepens - A Fistful of Euros
The EU in 140 Characters - FT Alphaville
When all else fails: beg, steal and borrow - FT Alphaville
