Worries over Latvia are once again on the increase. The Baltic country had told the IMF and the EU it would cut spending in 2010 by 500 mln lats in exchange for a 7.5 bln rescue package.
But over the weekend Latvia said cuts would infact total only 225 mln lats, prompting Swedish Finance Minister Anders Borg to warn that international patience was limited and that Latvia must deliver on its commitments.
The worry is that Latvia is finding it increasingly difficult to fulfill the conditions for it to receive payment of remaining tranches of the IMF loan, bringing with it the spectre of a currency devaluation.
Any currency devaluation of the lat would have a big negative impact on Swedish banks who have a big exposure to the country.
