25.3.2009 Official Journal of the European Union L 79/39 COUNCIL DECISION of 20 January 2009 providing Community medium-term financial assistance for Latvia (2009/290/EC) THE COUNCIL OF THE EUROPEAN UNION, Having regard to the Treaty establishing the European Community, Having regard to Council Regulation (EC) No 332/2002 of 18 February 2002 establishing a facility providing medium- term financial assistance for Member States’ balance of payments (') and in particular Article 3(2) thereof, Having regard to the proposal from the Commission made after consulting the Economic and Financial Committee (EFC), Whereas: (1) By Decision 2009/289/EC (?), the Council decided to grant mutual assistance for Latvia. (2)  Against a background of very high external financing needs, Latvian capital and financial markets have recently come under pressure, reflecting a general de- terioration in market sentiment, and increasing concerns about the health of the Latvian economy given its large imbalances in terms of wide external deficit, weakening public finances and high rates of cost and price inflation. The Latvian banking sector has experienced serious liquidity and confidence problems. The level of foreign currency reserves has decreased as the central bank intervened to preserve the currency peg. (3) Latvia's total external financing needs up to the first quarter of 2011 are estimated at EUR 7,5 billion. 4) It is appropriate to provide Community support to Latvia of up to EUR 3,1 billion under the Facility providing medium-term financial assistance for Member States’ balance of payments established by Regulation (EC) No 332/2002. That assistance should be provided in conjunction with a loan from the International Monetary Fund (IMF) of SDR 1,5 billion (1200 % of () O] L 53, 23.2.2002, p. 1. (3) See page 37 of this Official Journal. Latvia's IMF quota, around EUR 1,7 billion) under an IMF Stand-by arrangement approved on 23 December 2008. The Nordic countries (Sweden, Denmark, Finland, Estonia and Norway) are to contribute EUR 1,9 billion together, the World Bank — EUR 0,4 billion, the European Bank of Reconstruction and Development, the Czech Republic and Poland — a total of EUR 0,4 billion, bringing the total to EUR 7,5 billion over the period up to the first quarter of 2011. (5)  The Community assistance should be managed by the Commission. The specific economic policy conditions agreed with the authorities of Latvia after consultation of the EFC should be laid down in a Memorandum of Understanding. They should include, inter alia, measures intended to stem immediate liquidity pressures, to restore long-term stability by strengthening the banking sector, to correct fiscal imbalances and to adopt domestic policies that will improve competitiveness. The measures should include an immediate and sustained fiscal consolidation, a comprehensive bank resolution strategy, a strengthened crisis management capacity of regulatory authorities, comprehensive structural reforms, as well as other important measures. The detailed financial terms should be laid down by the Commission in the Loan Agreement. (6)  The assistance should be provided with a view to stemming immediate liquidity pressures and conditional on policies to restore long-term stability by strengthening the banking sector, correcting fiscal imbalances and adopting domestic policies that will improve competi- tiveness, while maintaining the narrow-band exchange rate at its existing central rate, HAS ADOPTED THIS DECISION: Article 1 1. The Community shall make available to Latvia a medium- term loan amounting to a maximum of EUR 3,1 billion, with a maximum average maturity of seven years. 2. The Community financial assistance shall be made available during a period of three years starting from the first day after the entry into force of this Decision.