Sweden next in propping up Latvia

RIGA - Sweden may lend Latvia 720 million euros within weeks as part of its contribution to the Baltic nation’s international bailout, according to a draft of the loan agreement, reports Bloomberg. Latvia will probably pay about 2.75 percentage points more than the three-month European interbank offered rate for the loan, said the document. The loan would be part of the 7.5 billion euro lenders’ bailout package. The money received so far has helped preserve the lats peg to the euro and reduce loan losses at Sweden’s Swedbank and SEB, the biggest banks in the Baltic region.

Sweden’s loans will be disbursed in four installments “after approval of the relevant review of the borrower’s program by the executive board of the IMF and the European Commission,” said the draft. The Swedish loans are part of a Nordic loan facility of 1.9 billion euros, in which Denmark, Norway, Finland and Estonia are also loaning money. The Nordic contribution is the second-biggest in Latvia’s loan, after the EU’s 3.1 billion euros and the IMF’s 1.7 billion euros.
The government has liquid reserves equal to about 10 percent of GDP after 2.7 billion euros was transferred from its international loan. It is set to receive a further 2.7 billion euros this year.