Latvia to seek support from IMF

Latvia has been hard hit by the global financial crisis

Latvia has become the second European Union country to seek the International Monetary Fund's (IMF) help to stabilise its financial system.

It is also asking for help from the European Union. The Latvian prime minister said the sum needed would be decided by talks with the IMF and EU.

The IMF is already involved in a $25bn (£16bn) bail-out plan for Hungary.

Latvia has fallen into recession and recently nationalised the country's second-largest bank.

The government invested $353m into the Parex bank to help it survive after a run on its deposits. It also offered $877m in guarantees to its creditors.

Latvia's economy, which grew by 50% between 2004 and 2007, shrank 4.2% in the third quarter of this year - the sharpest economic contraction in the European Union.

The Latvian government has already started talks with the European Commission, the executive branch of the EU, on a possible rescue package for its economy.

The IMF has said it has $200bn set aside to help out countries facing turmoil because of the current global financial crisis. It has also said it expects to provide help for some 24 countries.