Latvia will reduce budget spending by 10 percent.

The Latvian Government intends to amend the state budget, to reduce expenditures by 600 million lats (about 1.2 billion dollars). This was announced today at an extraordinary meeting of the Saeima, Prime Minister Ivars Godmanis, said the portal Mixnews. The reduction of more than 10 per cent of the budget in 2009.
Premier said that given the current economic situation, the budget deficit next year may amount to 4 percent of GDP, which is unacceptable. According to EU rules, a country applying for entry into the eurozone, may not have a deficit of more than 3 percent of GDP. Godmanis also noted that the government expects to receive about 100 million lats from the income tax system.
Latvia is now going through one of the most severe retsessy among EU members. In the third quarter of the country's GDP in annual terms fell to 4.2 per cent, which was the worst level since the early 90-ies. Until then, the Latvian economy grew steadily, showing the highest rates of economic growth among the countries of Eastern Europe.
To maintain the course lats and mitigate the economic recession, Latvia needs a stabilization loan from abroad. Perhaps that loan size of 5 billion dollars will be received from the IMF.