EU offers financial help to Latvia

BRUSSELS (Reuters) - The European Commission said on Saturday it was willing to give financial support to EU member Latvia, which is seeking aid to support an economy sliding towards a deep recession.

"The EU stands ready to participate in a coordinated financing package with the IMF conditional upon a strong commitment by the Latvian authorities to implement a rigorous and credible adjustment programme in order to underpin balance-of-payments sustainability in Latvia," the EU executive said in a joint statement with the French Presidency of the EU.

On Friday, the head of Latvia's central bank said aid from the European Union (EU) and the International Monetary Fund (IMF) would boost the stability of the country's lat currency.

The government said it had decided to seek help from the EU and IMF to help a faltering economy and after the government had to take over the country's second largest bank.

"We are in close consultations with the Latvian authorities and the International Monetary Fund to develop a joint response to the growing tensions in Latvia's financial markets," the EU statement said.

Latvia became the second former-communist eastern member of the 27-nation bloc to seek help from Brussels. Hungary was forced to reach out for aid last month as the financial crisis spread around the globe.

Ukraine and Serbia, which are not EU members, have also had to ask the IMF for help as they too struggled to fight off the worst global economic slump in almost 80 years.

Latvia says its stability is helped by having a banking sector dominated by Nordic banks Swedbank, SEB and Nordea.

However, what was Europe's fastest growing economy shrank 4 percent in the third quarter and state finances have worsened as the credit crunch hit home at a time when the Baltic economies were already heading for a hard landing.