Latvia in worse shape than anticipated

inspector_monkfish

10:29 22Jun09 EMERG: Latvia in worse shape than anticipated - IMF Blanchford

09:28 GMT - In [LATVIA] there is a public holiday today, however traders will be digesting disturbing comments from [IMF] Chief Economist [BLANCHFORD] on CNBC.

The IMF mission is now on the ground in Latvia and it was widely expected (following favourable statements by the EU's Almunia) that the IMF/EU would give the go-ahead for fresh funding sometime this week, especially now parliament has agreed to 2009 budget amendments. Blanchford warns that Latvia is in worse shape than anticipated however, and that the nation's fiscal deficit is larger than anticipated. He adds that Eastern Europe is going through a difficult patch. His comments will raise concerns that the IMF will stall the release of funding until further fiscal reform is implemented. This could trigger another run on the LAT, however the markets do not reopen until 25 June.

Degenerate

inspector_monkfish wrote: »

His comments will raise concerns that the IMF will stall the release of funding until further fiscal reform is implemented. This could trigger another run on the LAT,

Maybe that's his intent. Their attempts to maintain the currency peg are idiotic. If I was going to lend them money, I wouldn't want to see it p!ssed away as they crucify themselves at the behest of Euro-zone leaders. A major run on the currency would force the devaluation issue.

Andrew64

At least Latvia can still devalue if push comes to shove! Either they leave it and the economy goes down 18% this year! That's a deep Depression! Alternatively, they devalue and a lot of bankruptcies result because of all those Euro loans. Painful, but at least they can try exporting their way out of trouble. Ireland and Spain don't even have the option as they're stuck in the Euro - the modern day Gold Standard!

tomterm8

inspector_monkfish wrote: »

10:29 22Jun09 EMERG: Latvia in worse shape than anticipated - IMF Blanchford

.

How can Latvia possibly be in a worse shape than anticipated? In Q1, they saw a 18.9% annualised drop in GDP. Short of dropping a nuclear bomb on them, I don't know how Latvia's economy could be destroyed more thoroughly.