IMF running scared

RIGA - An International Monetary Fund team received threats in November 2008 while in Latvia negotiating the terms of the country’s international loan, Latvian Television reported, citing government officials, reports Bloomberg.
“I did not see it myself, it was a text message that one of the members of the IMF’s group received,” said former Premier Ivars Godmanis on the TV program De Facto, broadcast last week. Godmanis said the person who received the threat was advising on Latvia’s banking industry. “That was a serious shock for me,” he said.

The incident occurred two years ago, at the time when the government had decided to request help from international lenders. The government decision was taken in the beginning of November 2008, and a few weeks later the first mission of IMF experts arrived in Latvia to agree on the conditions of the loan.

The threat may have been connected with the takeover of Parex Banka AS, the country’s second-biggest lender, whose rescue forced Latvia to turn to a group led by the IMF and the European Commission for a 7.5 billion euro ($10.5 billion) loan, LTV reported, without saying where it got the information. Latvia, which took over 51 percent of Parex on Nov. 8, 2008, was advised by the IMF in a letter at the end of November to take 100 percent control, LTV reported.
The first round of talks between the lenders and the Latvian government ended without success after the SMS containing a threat was received. The IMF mission suddenly interrupted its work and fled to Lithuania.

Godmanis was shocked at the IMF’s decision. “I was in the countryside, and he [mission director Rosenberg] called me from the airport. When I said that I would activate all the national security structures which Latvia had available, nevertheless I received the answer that the decision had already been taken and that they would continue to work from Warsaw.”

The Latvian National Security Council also had reports about possible threats to members of the country’s banking regulator. LTV said Irena Krumane, the regulator’s director, was given a bodyguard for a short period, without saying where it got the information.

The security police who investigated the incident were not able to confirm that a member of the IMF team was under threat, said police spokeswoman Kristine Apse Krumina on the TV program. Godmanis told the program that it had been impossible to establish who had sent the threatening SMS. “At that time I was somewhat in a state of despair, as how were we to continue the talks? We were told that work would continue on the memorandum, that they would do this in Warsaw and put in great efforts to make it back,” said the former premier. Serious discussions had to take place with the embassies of several countries before the mission could be persuaded to return to Latvia.

The IMF returned to Latvia after speaking with a number of foreign embassies in Latvia, the program reported. The IMF and the EU led a group that agreed to an international loan for Latvia on Dec. 19, 2008.
While in Latvia this incident, which could have frustrated talks over a very important loan, has not been highly publicized, it is still being mentioned at the IMF’s headquarters in Washington and the country’s name was being presented in a less than favorable light in informal conversations at the fund’s summit last week.