Problem:
The case explores how Latvia's economic fortunes have changed since 2004.
At the time, the country was enjoying an economic boom, but critics worried that the economy was becoming overheated. By 2008, financial institutions were in trouble, and at least one major company was nationalized. Eventually, Latvia was pushed into accepting assistance from the IMF. Discussion of the case can revolve around the following questions:
Q1: What kind of crisis was Latvia experiencing in 2008, a currency crisis, a banking crisis, or a debt crisis?
Q2: If the IMF had not stepped in with support, what do you think might have occurred?
Q3: Could the Latvian government have headed off the 2008 crisis? What actions could I have taken to do this? What might the economic and political consequences of those actions have been?
Q4: What do you think the short-term consequences of the IMF policies will be for Latvia? What might the long term consequences be?