27.05.2010 FHRUL letter to the International Monetary Fund (IMF)
On international debt of the Republic of Latvia
The need for this appeal to you appears because of support that at this time international donors provided to stabilize the financial system of the Republic of Latvia and the prospects of return of international loans.
Currently the international debt of Latvia to the IMF is 1 billion euro, next year it will reach 1.7 billion euro. The total international loan, Latvia received as support during the crisis, at the end of the next year may form 7,5 billions euro. Return of debts owed to the IMF is mainly planned for 2012, 2013 and 2014.
Having studied the structure of the debt of Republic of Latvia, as well as the scheme to its return, we came to the conclusion that very short time limits are appointed for return of debt, and even if Latvia will observe fiscal discipline, according to the recommendations of international lenders, then anyway it can be difficult with the return of debts in such a short time. For example in 2014 the amount that our country will return to all creditors, is over 1 billion LVL, which is 1/5 part of the budget of our country. Ability to pay this amount gives us legitimate concerns, and we believe that the return of debt in the planned amount will be difficult about objective reasons.
In this regard we would be grateful if you could provide us with your assessment of possible Latvia’s debt restructuring after 2012, as well as the conditions under which such a restructuring is possible.
Thank you in advance for your reply,