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Latvia is looking to set up a stabilization package in case the economic situation in the country gets worse, but has to act fast. (With Stratfor map)

According to unofficial reports out of Latvia, the Baltic country is considering launching an official consultation with the International Monetary Fund (IMF) and the European Commission regarding a possible stabilization package. The Latvian newspaper Diena, citing unnamed government officials, reported Nov. 20 that the IMF consultations might not include a loan, but rather a standby agreement that could be tapped in case the situation in Latvia worsens.

As the global financial crisis sweeps through Europe, the region receiving particular attention is the so-called “emerging Europe” — Central Europe, the Baltic states and the Balkans. Of these countries, the Baltics — Latvia, Lithuania and Estonia — are among the most vulnerable to the current crisis. The rumors out of Riga that the government is considering IMF and European Commission funding will not instill confidence in the economies of its neighbors Estonia and Lithuania, which share many of the same problems. The three have had overheated economies in which foreign capital fueled enormous housing booms, a trend now set to be reversed with a considerable crash. As the race for the IMF’s cash quickens and the queue begins to grow, being the first in line is becoming ever more important.