Fitch: Pressure on Latvia currency likely

Fitch Ratings said it said that the collapse of Latvia's coalition government could delay the adoption of budget amendments to maintain Latvia's budget deficit at 5% of GDP, as required by the International Monetary Fund under a €7.5 billion loan program agreed in Dec. 2008.

Fitch said it believes that a failure to maintain budget controls could delay the disbursement of international funds to Latvia and lead to renewed pressure on Latvia's currency.

Latvia's ratings include long-term foreign- and local-currency issuer default ratings at BBB- and BBB respectively. The outlook is negative.

While Latvia has a history of short-lived coalition governments, the collapse of Prime Minister Ivars Godmanis's four-party coalition government comes during a period of severe economic stress, Fitch said.

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