IMF approves bail-out for Latvia

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The International Monetary Fund (IMF) has approved a 1.68-billion-euro ($2.35 billion) rescue loan for Latvia, a BBC report said Thursday.
It is part of a 7.5-billion-euro package that includes funding from the European Union, World Bank and other countries.
It will allow Latvia to maintain its currency's peg to the euro, but there will be sacrifices such as cuts in public sector wages and state spending.
Value added tax will be raised from 18 per cent to 21 per cent, which has prompted protests in the capital, Riga.
Latvia has also agreed to keep its budget deficit below 5 per cent of gross domestic product next year and reduce it to three per cent by 2011.
The Nordic states, and especially Sweden, are involved because their banks have loaned a lot of money in Latvia, and so would be damaged if its economy were to deteriorate any further.
Meanwhile, other countries nearby have been keen to help because of the damage that would be done to them if Latvia's currency were to be devalued.