Latvian negotiations with lenders intensify

RIGA -- Negotiations between the Latvian government and a team of international lenders that offered the country a bail out last year have intesified as worries over Latvia's deficit grow.

After a series of difficult negotiations, the Latvian government has been forced to reduce a promised 26 million lats in aid to the agriculture sector to just 10 million lats. The aid will take the form of loans for farmers who are unable to secure money from the bank but still operate economically viable projects.

The announcement comes less than a week after government employees took a may cut of more than 30 percent in a bid to cut back on spending to satisfy international lenders, including the EU and the IMF.

The pay cuts were unevenly distrbuted, with the egional Development and Agriculture seeing average salary cuts of 46 percent, while Foreign Ministry employees were hit with only a 17 percent reduction.

Lenders have expressed worry that in this year's budget spending from the basic and special budget has exceeded revenues by 181.4 million lats.

Talks are also underway to increase the budget for the new national library, which is requesting an additional 13 million lats -- though that money would be subtracted from the library budget in 2012.