International rating agency Standard & Poor's (S & P) downgraded the sovereign rating of Latvia, reported AFP. Long-term credit rating of the country's obligations in foreign and local currency was downgraded to "BBB-" to "BB +". Short-term credit rating dropped from "A-3" to "B".
The reason for reducing the growth rate was the level of external debt, as well as the implementation of the Government of Latvia expensive programs stimulate the economy.
This is not the first lowering of the rating of Latvia over the past few months. In early November 2008 S & P downgraded the country's sovereign rating on obligations in foreign and national currency from "BBB" to "BBB-". This prediction was rated left "negative."
The reason for the decline rate in November, have been increasing risks to the country's banking system, which is faced with the outflow of deposits. In addition, the negative impact on the rating has a high level of external debt, as well as the need for financing the balance of payments.
In the fourth quarter of 2008 the economy of Latvia decreased by 10.5 percent. Previous quarter GDP was 5.2 percent. According to the Government, in 2009 the GDP of Latvia reduced by five percent. In the fourth quarter of 2008 industrial output in the country declined by 11.3 percent and retail sales - at 15.4 percent.
In order to maintain the stability of the financial system, the Latvian government nationalized the country's largest bank - Parex. In addition, an international group of lenders led by the IMF and the European Union, Latvia has provided a loan of 7.5 billion euros.
February 20, 2009, Prime Minister of Latvia Ivars Godmanis resigned. In doing so, President Valdis Zatlers said that Godmanis lost its credibility when the government refused to hold an urgent reform and reduce the number of ministries.
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Plus we should remember two important facts. At first, Ukraine will suffer losses because the price for using Ukranian gas pipe didn’t grow proportionally to the Rusiian gas price. Let’s make a simple calculation. Russia pays Ukraine $1,7 for transporting 1000 cubic meters of gas on 100 km. Average distance which is passed by Russian gas by our pipe aproximately 1100 km. Russia transports to Europe at least 110 milliards cubic meters of gas annually. So Ukraine gains about $2 milliards anually. And the lowest European price is $4 per 100 kilometers, so we could gain about $4,7 milliards. Accordingly we can say that Timoshenko complimented Putin about $2,7 milliards.
How much gas could be purchased by these? 10-12 milliards of cubic meters at least. Timoshenko grants Putin more than the 50% of annual gas necessity of Ukraine. Receiving the increasing of prices and Ukraine’s obligation to buy technical gas by own cost, though at favourable prices.
http://ua-ru-news.blogspot.com/2009/01/new-price-on-russian-gas.html
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