**The worst of Latvia’s recession is now over, Prime Minister Valdis Dombrovskis has told the BBC.**He ruled out a devaluation of the country’s currency and said the Baltic state was now on target to meet European Union budget deficit limits.
Mr Dombrovskis predicted the deficit would fall to 10% this year, and 8.5% in 2010.
Latvia’s economy has been hit hard by recession, contracting at an annual rate of 18.7% from April to June.
Its unemployment rate soared to 18.3% in August, the highest in the European Union after Spain.
‘Economy stabilising’
Mr Dombrovskis confirmed that the government coalition would be holding an “extraordinary meeting” on Monday to discuss making 325m lats ($677.5m; £423m) in budget cuts, and other measures to deal with the economic crisis.
The meeting is due to discuss the prime minister’s controversial proposal that Latvian homeowners behind on their mortgages should only be liable for the value of their property rather than the level of their outstanding loan.
This proposal has angered the Swedish government, whose banks dominate the sector in Latvia.
While Mr Dombrovskis admitted that there remained “difficulties to overcome”, he said the Latvian economy was now “stabilising”.