Polls have opened in Latvia for an election that could have a major impact on the country’s future finances. Latvia has been the hardest hit in the EU by the recession and umemployment has soared. Already following an austerity programme introduced in order to get an IMF loan, how closely will this plan will be followed after the election depends on who wins.
Opinion polls suggest the current Prime Minister, Valdis Dombovskis, is the favourite. Victory for his centre-right Unity party would be best outcome for continuing the austerity programme tied to the IMF bail-out money.
A strong contender is the pro-Russian Harmony Centre, which has now styled itself as a socially democratic party. They party has talked about re-writing the terms of the IMF deal. They could poll up to a third of the vote, and a win for them would make markets nervous.
However, it may be that neither of these parties win an outright majority in the 100 seat parliament. If so, the balance of power could be held by a variety of smaller minority parties.