IMF ready to help Latvia in economic crisis: IMF chief

(WASHINGTON) - The International Monetary Fund is "ready to rapidly assist" Latvia deal with its economic crisis, in close cooperation with the European Union, IMF chief Dominique Strauss-Kahn said Friday in a statement.

"I have informed the authorities that the IMF stands ready to rapidly assist their efforts in the context of a comprehensive economic program, and in close cooperation with the EU," the managing director said.

"The IMF's Executive Board has initiated fast-track procedures" to release IMF funds to Latvia should the need arise, he added.

The financial institution recently simplified its lending procedures to provide quicker aid to needy countries caught up in the global financial turmoil.

Latvian Prime Minister Ivars Godmanis announced Thursday his country was about to launch formal talks with the EU and IMF on financial aid to cushion the Baltic nation from its deepening economic crisis.

Godmanis told reporters the goal of the talks was to "stabilize the financial system."

Latvia, which broke free from the crumbling Soviet Union in 1991, has enjoyed a reputation as an economic "tiger," notably since joining the EU.

But after several years of double-digit growth, the country of 2.3 million people is now grappling with a recession as once-robust domestic demand slumps in the face of high inflation, tighter domestic credit rules and the global economic crisis.

The Latvian economy shrank 4.2 percent in the third quarter compared with the same period in 2007 and official data show the country is suffering the sharpest recession in the EU.

The Latvian central bank expects the economy to shrink 1.5-1.7 percent this year and 3.5-3.9 percent in 2009.

Several other emerging economies in Europe, including EU member Hungary and non-members Ukraine, Belarus and Serbia have also sought international aid as the global credit crunch threatens the banking industry and markets slump.