The IMF finally announced it's Latvia "bailout" plan on Friday. The plan involves lending about €1.7 billion ($2.4 billion) to Latvia to stabilise the currency and financial support while the government implements its economic adjustment plan. The loan, which will be in the form of a 27-month stand-by arrangement, is still subject to final approval by the IMF's Executive Board but is likely to be discussed before the end of this year under the Fund's fast-track emergency financing procedures, and it is not anticipated that there will be any last minute hitches (although I do imagine some eyebrow raising over the decision to support the continuation of the Lat peg). The Latvian government admits that some of the IMF economists involved in the negotiations advocated a devaluation of the lat as a way of ammeliorating the ...

Now this is a very interesting question, isn't it? The only honest answer I can give is that I don't know, and indeed I haven't the faintest idea. The government of Latvia (the Baltic state which is currently most rife with "rumours" about imminent devaluations) works in its own wondrous ways, and neither we (nor Latvia's citizens) have any idea at all how they plan to lift their country out of the deepest depression they have experienced in many a long year.br /br /a href="http://4.bp.blogspot.com/_ngczZkrw340/SRQ9-7COE2I/AAAAAAAALWc/3VxjefQe-0s/s1600-h/latvia+GDP.png"img id="BLOGGER_PHOTO_ID_5265902015511139170" style="DISPLAY: block; MARGIN: 0px auto 10px; WIDTH: 320px; CURSOR: hand; HEIGHT: 200px; TEXT-ALIGN: center" alt="" src="http://4.bp.blogspot.com/_ngczZkrw340/SRQ9-7COE2I/AAAAAAAALWc/3VxjefQe-0s/s320/latvia+GDP.png" border="0" //abr /br /What I do know is that, economically speaking,the present situation is simply unsustainable, and something is going to have to be done. Indeed the country's government is in talks with both the IMF and the EU Commission about this very topic as I write. My ...

Latvia's economy shrank an annual 4.2 percent in the third quarter, the fastest drop since at least 1994, according to today's flash estimate from the Riga-based statistics office (Friday). This follows a 0.1% year on year expansion in the second quarter.We do not have quarter on quarter statistics at this point, but if we apply the minus 4.2% calculation over last years Q3 2007 constant price number, then what we get is 2.147 billion Lati, and a GDP graph which looks like this:Which may have little analytic value (since the data is not seasonally corrected), but does enable us to form a pretty rough and ready visual impression of what is going on, where the annual contraction data remains rather abstract. The economy definitely peaked and started to enter contraction mode after the ...

Financial NewsJason Corcoran in Moscow09 June 2008 Swedish manager sees opportunities in downturnA marked slowdown in the Baltic economies has cooled the interest of many investors, but others continue to sense opportunities.Swedish fund manager East Capital Asset Management hopes to raise €150m ($232m) for a fund with a 20% exposure to the three former Soviet republics of Latvia, Lithuania and Estonia, to add to its €4.4bn of assets under management. Its Bering New Europe fund will invest in small to mid-sized companies in the central European and Baltic markets.Managers at East Capital believe the sharp adjustment has spawned companies with attractive valuations. East Capital director Andras Szalkai said: “We see good growth and limited risk for central Europe and the Baltics that we want to mirror in our fund. The global market situation has created many investment opportunities.”He ...

Financial NewsJason Corcoran in Moscow09 June 2008 Swedish manager sees opportunities in downturnA marked slowdown in the Baltic economies has cooled the interest of many investors, but others continue to sense opportunities.Swedish fund manager East Capital Asset Management hopes to raise €150m ($232m) for a fund with a 20% exposure to the three former Soviet republics of Latvia, Lithuania and Estonia, to add to its €4.4bn of assets under management. Its Bering New Europe fund will invest in small to mid-sized companies in the central European and Baltic markets.Managers at East Capital believe the sharp adjustment has spawned companies with attractive valuations. East Capital director Andras Szalkai said: “We see good growth and limited risk for central Europe and the Baltics that we want to mirror in our fund. The global market situation has created many investment opportunities.”He ...