Latvia's central bank chief and president appeal to patriotism

Apr 1, 2009, 7:49 GMT

Riga - Central bank governor Ilmars Rimsevics on Wednesday called on Latvians to be more patriotic in their purchasing choices and to ignore rumours concerning the possible devaluation of the national currency, the lat.

'Residents should become more patriotic regarding Latvian goods and the national currency in spite of the circumstances,' Rimsevics said.

'We should not believe everybody who announces devaluation, hoping to earn money as a result,' he told the Latvijas Avize newspaper.

He also said it was 'wasted energy' for Latvians to feel embarassed or insulted about accepting bail-outs from international lenders such as the International Monetary Fund and called on the government to guarantee bad business loans.

'One way the government could help would be guarantees for a year or two, postponing payments for the principal and interest until Latvia's national economy starts recovering,' he said.

Rimsevics' advice came a few hours after President Valdis Zatlers backed down Tuesday night from a threat to enact legislation leading to the dissolution of Parliament as the embattled Baltic state wrestles with its economic decline.

Speaking in an address broadcast live on national radio and television, Zatlers said he was satisfied that the new government was moving in the right direction, so would not enforce his threat but would continue to monitor progress closely.

'Latvia is undergoing a political and economic crisis at this time,' said Zatlers.

'When I announced on January 14 that Parliament might be dissolved ... that was an unexpected step, but it was the only way in which I could move the political process onto a constructive track,' he said.

As the new government of Valdis Dombrovskis was only 20 days old and had been given 'a credit of public trust,' it should be allowed to continue its work, the president said.

Zatlers had issued his ultimatum in the wake of riots in the Latvian capital Riga, declaring himself dissatisfied with the progress being made by then prime minister Ivars Godmanis.

'Surveys showed that many people in Latvia felt that the disorder on January 13 was justified. That is a very dangerous signal,' Zatlers warned.

When Godmanis resigned on February 20, Zatlers said the March 31 deadline remained in place for the new Dombrovskis government, which was formed on March 12.