Latvian Prime Minister Ivars Godmanis resigned on Friday, a move which analysts attributed to the worsening social and economic crisis and huge political pressure in the Baltic country.
WORSENING ECONOMIC CRISIS
Hit by the worst global economic crisis in 80 years, the Latvian economy slipped into recession in 2008.
The economy shrank 4.6 percent year on year in the third quarter, the worst performer in the 27-member European Union (EU), and further contracted 10.5 percent in the fourth quarter.
Those dire figures were on top of the 15.4-percent annual inflation rate.
With consumer prices soaring and wages remaining unchanged, the public had to tighten their belts, and discontent set in.
To exit the quagmire, the country sought a 7.5-billion-euro (9.43-billion-U.S. dollar) bailout from the International Monetary Fund (IMF) and other lenders in December.
But plans to stabilize the economy through tax reforms and reduction of budget expenditure were not carried out smoothly, dashing any hopes of a fast economic recovery.
POLITICAL INSTABILITY ADDS TO ECONOMIC WOE
Political instability also added to the economic woes of the country, which further embattled the prime minister.
Public discontent spilled onto the streets on Jan. 13, when thousands of people staged a demonstration, demanding the government step-down and dissolution of parliament. Some protesters also clashed with police as they tried to storm the parliament building.
In the wake of the riots, opposition politicians called on President Valdis Zatlers to dissolve parliament and form a new government.
Parties in the ruling coalition were also divided on Godmanis' government reform initiative, which included a reduction in the number of ministries.
On Feb. 13, Zalters said he had lost confidence in Godmanis after the latter backtracked on plans to cut the number of government ministries.
One week later, the People's Party and the Union of Greens and Farmers in the coalition, said they had lost confidence in Godmanis and demanded his resignation.
People's Party chairman Mareks Seglinsh said in this complex situation, a new government with more support from parliament and the public was needed.
Godmanis took office in December 2007 after Aigars Kalvitis stepped down following street demonstrations over alleged abuse of power and economic mismanagement.
Analysts said the president may initiate a referendum on the dissolution of parliament and call early elections to end the political uncertainty.