WASHINGTON - THE International Monetary Fund said on Tuesday its executive board approved a US$2.35 billion (S$3.41 billion) loan for Latvia, which is reeling from the global financial turmoil.

The loan was approved by the IMF executive board under a fast-track emergency financing mechanism 'to support the country's programme to restore confidence and stabilise the economy', the Washington-based Fund said in a statement.

The IMF programme is centered on maintaining Latvia's exchange rate peg while seeking 'exceptionally strong' domestic policies and substantial international financial assistance, the statement said.

It was part of a coordinated international effort, the Fund said.

The European Commission said last week international donors had agreed to provide Latvia with a 7.5-billion-euro (S$15.23 billion) loan package to help the embattled Baltic country cope with a severe economic downturn.

The European Union is to provide the biggest share of the package, offering up to 3.1 billion euros in medium-term assistance.

The Nordic countries - Sweden, Denmark, Finland and Norway - will provide a combined 1.8 billion euros and the International Monetary Fund will offer 1.7 billion euros.

The European Bank for Reconstruction and Development along with Czech Republic, Poland and Estonia will provide 500 billion euros while the World Bank will provide a further 400 million euros. -- AFP