Wishing to restore the national economy, Latvia approached the International Monetary Fund (IMF) and the European Commission (EC) in December 2008 to borrow 4.5 billion EUR within an international assistance programme (a loan of 7.5 billion EUR was possible according to the initial agreement). The deal was finally completed in 2011. On the way to receiving the loan Latvia undertook to implement a number of austerity measures and kept this promise later on, although it caused some negative impacts on the social environment, development and natural environment. This money was effectively used to bailout the foreign lenders to Latvia’s banks.
The IMF regards Latvia a success story, while the leading economists and debt experts consider that such a brutal and society-based solution to debt commitments cannot be evaluated positively.
Within the international loan programme Latvia borrowed 4.5 billion EUR:
- 1.16 billion EUR from the International Monetary Fund; the loan was repaid in advance at the end of 2012;
- 2.9 billion EUR (2.04 billion LVL) from the European Commission;
- 400 million EUR (281 million LVL) from the World Bank;
- 100 million EUR (70.28 million LVL) from the European Bank for Reconstruction and Development (EBRD) to save the Parex Banka.
Latvia has already settled the obligations towards the IMF in 2012, and the first debt repayment instalment to the EC in the amount of 1 billion EUR was transferred in 2014; the EC will receive another 1.2 billion EUR in 2015, 500 million EUR in 2019, and 200.06 million EUR in 2025. During 2015–2020, debt obligations have to be settled also with the World Bank — 60.06 million EUR must be repaid in 2015, 80 million EUR must be repaid annually from 2016 until 2019, but the last repayment installment in the amount of 20.06 million EUR will be transferred in 2020.