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Latvia's government resigns amid economic crisis

02/20/09 10:32 AM ET   AP

Latvia

RIGA, Latvia — Latvia's center-right coalition government resigned Friday after weeks of instability brought on by the country's economic collapse.

President Valdis Zatlers said he accepted the resignation of Prime Minister Ivars Godmanis and his administration, which had been in power since December 2007. Zatlers said he would begin talks with party leaders Monday to find a new candidate for prime minister.

Earlier Friday, the two largest parties in the ruling coalition parties had urged Godmanis to step down.

Godmanis blamed those parties _ the People's Party, and the Greens and Farmers Union _ for the government's collapse, particularly at a time when Latvia must carry out tough economic reforms to get a rescue package from international creditors.

"I am ready to continue working, but I think that responsibility for the consequences created by this government's resignation must be taken by those parties that overturned the government," Godmanis told reporters.

International lenders, including the EU, the International Monetary Fund and Nordic countries, have pledged euro7.5 billion (US$9.5 billion) to help the Baltic country recover from its economic predicament.

President Zatlers has pressured the government to cut back on the number of ministries and bring in new faces in an effort to win back the public's trust, which has plummeted.

However, despite repeated attempts, the four ruling parties have been unable to reach a consensus on which ministries to abolish.

The country's economic decline is accelerating. Output plummeted more than 10 percent in the fourth quarter year-on-year, meeting a common yardstick for a depression.

On Wednesday the Finance Ministry predicted that gross domestic product would fall 12 percent fall this year.

Public anger spilled into the streets on Jan. 13, when scores of protesters clashed with police as they tried to storm Parliament. More than 40 people were injured in Latvia's worst riots since the country split from the Soviet Union in 1991.

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Filed by Hanna Ingber Win  |