Latvian ruling coalition falls, PM resigns

RIGA Fri Feb 20, 2009 8:08pm IST

Latvia's Prime Minister Ivars Godmanis speaks during a news conference at the Foreign Correspondents' Club of Japan in Tokyo January 22, 2009. REUTERS/Issei Kato

Latvia's Prime Minister Ivars Godmanis speaks during a news conference at the Foreign Correspondents' Club of Japan in Tokyo January 22, 2009.

Credit: Reuters/Issei Kato

Related Topics

RIGA (Reuters) - Latvia's coalition government collapsed on Friday after the prime minister resigned to stem a fall in popularity during a deep economic crisis.

President Valdis Zatlers said he had accepted Prime Minister Ivars Godmanis's resignation and would start talks with all parties on a new government.

It was the second European government to succumb to the economic crisis after Iceland.

Political instability has added to the economic problems of the small Baltic state, igniting a riot on Jan. 13. The country had to take a 7.5 billion euro ($9.43 billion) IMF-led rescue loan last year.

"It is possible they will be able to work out a new coalition but I think what it really means is new elections," said Lars Christensen, head of emerging markets research at Danske Bank.

"There will only be one issue at stake and that will be the austerity measures and the IMF deal. It is possible that means some parties may look to move away from the IMF deal, which would be very bad news for the Latvian economy."

Mareks Seglins, chairman of the largest coalition party, the People's Party, told reporters he and the second biggest coalition party, the Union of Greens and Farmers, thought the prime minister's resignation was the only way to help boost public trust in the unpopular administration.

Godmanis, who led Latvia when it quit the former Soviet Union in 1991, was rebuffed recently when he tried to bring an opposition party into the government. He survived a motion of no confidence vote in parliament earlier this month.

Latvia's crisis, which began during the global credit crunch, has accelerated and the finance ministry has forecast a drop in the economy this year of 12 percent, meaning further budget cuts are likely.

The political crisis has struck as a team from the International Monetary Fund visits Latvia.

(Additional reporting by Jorgen Johansson and Peter Apps)

FILED UNDER:
Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.

  • Most Popular
  • Most Shared

REUTERS SHOWCASE

Hong Kong Protests

Hong Kong Protests

Hong Kong protests approach potential National Day flashpoint.  Full Article 

Seeking Reassurance

Seeking Reassurance

Amid differences, Israel's Netanyahu to seek reassurances from Obama on Iran.  Full Article 

Ebola in U.S.

Ebola in U.S.

Traveler from Liberia is first Ebola patient diagnosed in U.S  Full Article 

Fighting IS

Fighting IS

Australian aircraft to support U.S.-led air strikes in Iraq - PM.  Full Article 

Indonesia Politics

Indonesia Politics

President manages hopes as hostile parliament convenes  Full Article 

Security Breach

Security Breach

U.S. lawmakers rebuke Secret Service over White House breach  Full Article 

Palestinian Occupation

Palestinian Occupation

Jewish settlers occupy Palestinian homes in Old City's shadow  Full Article 

Ebola Chronology

Ebola Chronology

Worst Ebola outbreak on record tests global response  Full Article 

Blurring Lines

Blurring Lines

In al Qaeda attack, lines between Pakistan military, militants blur  Full Article 

Reuters India Mobile

Reuters India Mobile

Get the latest news on the go. Visit Reuters India on your mobile device.  Full Coverage