Greece should learn from Latvia - IMF chief

SWEDEN: Crisis-ridden Greece and other debt-wracked European countries should learn from Latvia’s successful reform programme, the head of the International Monetary Fund urged in an interview on Tuesday.

“It’s important for other crisis-ridden countries to learn from Latvia. The programme there was a success,” IMF chief Christine Lagarde told Swedish daily Svenska Dagbladet.

“An important point is that the politicians owned the reform programme. They realised that structural reforms were needed and took a lot of brave decisions,” she said.

“Another lesson is that cutbacks need to be made early on,” she said, noting the risk of reform fatigue if austerity measures are not introduced at once.

Latvia received a 7.5-billion-euro ($9.4 billion) bailout from the IMF in December 2008, after it suffered the world’s deepest recession during the global economic crisis when its economy shrank by a cumulative 25 percent in 2008-2009.

Coupled with a biting austerity drive, the bailout saw growth return to the ex-Soviet Baltic state of two million last year when it clocked a 5.5 percent expansion. Latvia’s three-year reform programme was concluded in December last year, even though Latvia is still paying off its IMF loans. However, unemployment remains high.

Joblessness rose to 16.3 percent in the first quarter of the year from 15 percent in the last three months of 2011. Lagarde meanwhile urged Greek politicians to agree to reforms.

“For Greece it is important that the politicians accept the reform programme, and own it.

AFP