Danske Concerned About The Ongoing Dispute Between International Lenders and Latvians

A brief background story of latest political developments in Latvia you will find at MSN News.

The full note from Danske Bank on the current standing is available here, but the key message as follows:

Consequently, we are in a stand-off situation where the lenders seem to have tied themselves to the mast by refusing to change the loan terms, while at the same time the borrowers fail to show the political will to comply with these terms. Something has to give – in this case the ball seems to be in Latvia’s court – in order for the situation to be resolved.

A major Swedish newspaper has during the weekend published an article alleging that the Swedish Finance minister has contacted the management of Swedish banks with large Baltic exposure and warned them of an imminent collapse in the talks in Latvia. Moreover, the same article states that the IMF is pushing hard for a devaluation as the only viable solution. The contents of the article have not been confirmed by any government source, and must therefore be considered as hearsay until further notice.

No later than 23 October the Latvian government must submit its budget proposal for 2010 to the Parliament. The Latvian Parliament thus has another 2.5 weeks to gather support for further austerity measures, or face the consequences of failing to meet with its obligations.

Here are the Swedish links ...