Credit access confirmed

RIGA - Latvia signed loan agreements with Denmark, Estonia, Finland, Norway and Sweden on Sept. 21 that will provide Latvia with a borrowing option within the Balance of Payment assistance program, reports news agency LETA. The loan agreements were signed by Finance Minister Einars Repse (New Era). Nordic lenders were represented by Danish Ambassador to Latvia Per Carlsen, Estonian Ambassador to Latvia Mati Vaarmann, Finnish Ambassador to Latvia Maria Serenius, Norwegian Ambassador to Latvia Jan Ole Grevstad and Swedish Charge d’Affaires a.i. in Latvia Anna-Lisa Trulsson Evidon.

The loan agreements form a part of the 7.5 billion euro financial assistance package approved at the end of 2008, and, complemented with policy measures, are aimed at the stabilization of Latvia’s economy and financial market. The signed loan agreements will provide an opportunity for Latvia to borrow up to 1.9 billion euros from Nordic countries when needed and if there is progress with the implementation of commitments under the agreements with the European Union and International Monetary Fund.

“These loan agreements with the Nordic countries will provide us not only with an opportunity to borrow financial resources, but also will contribute to the stability of the whole region. Once again I would like to express our sincere gratitude to Denmark, Estonia Finland, Norway and Sweden for participating in the international financial assistance program to Latvia with bilateral loans,” Repse said at the signing ceremony.

In view of further signs of stabilization in the Latvian economy and a much stronger fiscal and liquidity position, it has been agreed during the last Review Mission of the European Commission and IMF that the bilateral loans will be considered as credit facilities going forward.
The Estonian-Latvian loan agreement that was signed allows Latvia to borrow up to 100 million euros from Estonia. The loan would have a duration of up to 15 years and, if used, would help to guarantee that the Latvian economic stabilization program is put to practice.

Latvia has said that it will most likely not use the possibility of taking loans from separate countries and will borrow around 400 million euros from the IMF, World Bank and European Commission.
Should Latvia still decide to take a loan from Estonia, it can do so until Dec. 22, 2011, and in two parts. The loan interest rate would be 3 months Euribor + 2.75 percent a year.