European politicians hit hard by economic meltdown:  Latvia’s Government Is the Latest in Europe to Fail.

Latvia’s prime minister and cabinet resigned Friday, making it the third European government, after Iceland and Belgium, to be toppled by the economic crisis.

The fall of the Baltic country’s center-right coalition government — following weeks of political instability as the Latvian economy nosedives after years of strong growth — deepens worries that eastern Europe’s economic problems could send fresh shockwaves to its neighbors in the west.

Latvian President Valdis Zatlers called for talks to patch together a new government, after accepting the resignation of Prime Minister Ivars Godmanis, in office since December 2007. He stepped down after the two largest parties in the ruling coalition said they had lost confidence in him.

Economy in depression:

The government last year turned to the IMF and a consortium of European countries for its loan to cover a ballooning current-account deficit. As part of the agreement, Latvia decided to resist a devaluation and launch an austerity program.

The economy’s decline has accelerated under the plan, with output falling more than 10% in the fourth quarter of 2008 from the previous year, meeting a common yardstick for a depression. On Wednesday the Finance Ministry predicted that gross domestic product would fall 12% this year.

Latvia’s president had pressured the government to cut back on the number of ministries to win back public trust. But the coalition of four ruling parties had been unable to reach a consensus.

Thanks to Open Europe

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