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Latvia to repay entire IMF loan before term

Latvian Prime Minister Valdis Domprovskis and Christine Lagarde, the Managing Director of the International Monetary Fund.
 RIGA, Dec 10 - Latvia has reached agreement with the International Monetary Fund on the repayment of the entire loan borrowed from the IMF before term - already this year.

The remaining amount that Latvia has to return the IMF is SDR (special drawing rights) 603.038 million or LVL 503.54 million, as the Finance Ministry informed the "Nozare.lv" business portal.

By successful government bond issue on the international financial markets, with the historically-lowest interest rate, Latvia can take the next step and repay the entire IMF loan before term. This is an important milestone for the entire Latvian economy as well as for foreign investors, because by this Latvia confirms its ability to keep its finances in check. As a result of the deal, Latvia will save several million lats that will not have to be spent in interest payments but could be invested in the development of the country, said Finance Minister Andris Vilks (Unity).

In an entry in his "Twitter" account, the minister adds: "Just a while ago, there were many smarty-pants' claiming that Latvia would have to carry on with the IMF loan program for years, or even that Latvia would not be able to repay the loan." The minister also thanks the IMF for supporting Latvia when the country fell on hard times.

The IMF loan will be repaid using the money that was raised through the December 5 bond issue. The annual interest rate was set at 2.75 percent, the rate of return is 2.889 percent - the lowest interest on Latvia's borrowings on the international financial markets.

Altogether, Latvia borrowed SDR 982.24 million (LVL 820.2 million) from the IMF.

As reported, the total amount of the international loan program was EUR 7.5 billion (LVL 5.25 billion). Nevertheless, Latvia got by with EUR 4.5 billion (LVL 3.16 billion).

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