EU leaders to back swift Latvia aid payment

European Union leaders will on Friday back plans for swift disbursement of the next instalment of EU aid for Latvia, according to a final draft of a summit declaration.

Latvia is waiting for a decision by the IMF and the European Commission, the EU's executive, on whether it will receive the second, 1.2 billion euro ($1.68 billion) portion of an aid package from the two institutions.

EU diplomats said Latvian Prime Minister Valdis Dombrovskis had asked EU leaders in Brussels to back a government austerity programme intended to win more financial help and resist pressure for the lat currency to be devalued.

"The European Council welcomes the intention of the Commission to propose the swift disbursement of the next instalment of the Community balance-of-payments assistance," the draft obtained by Reuters said.

"The European Council supports the adoption of the new budgetary measures in Latvia aiming at sizeable fiscal consolidation this and next year," it said of cuts that will amount to 500 million lats ($999.6 million) this year.

"It stresses that rigorous implementation of the measures adopted together with credible medium-term strategy is imperative to delivering a successful outcome of the current adjustment programme."

Latvia has been hit particularly hard by the global financial crisis after years of unsustainable, double-digit growth and a real estate bubble.

Last year, it received a 7.5-billion euro aid package from the IMF and the EU which is being released gradually.

Several thousand people protested on Thursday in Latvia against budget cuts. The government has been criticised for taking too long to find the cuts and for suddenly announcing the 500 million lat reduction figure after local elections.