By Aaron Eglitis

December 7, 2015

Latvia’s government fell as Prime Minister Laimdota Straujuma resigned, bowing to pressure from within her party as it tries to reverse a collapse in support a year after winning office.

Straujuma, the Baltic nation’s first woman prime minister, quit Monday after support for her Unity party fell below that of its coalition partners, the Union of Greens and Farmers and the National Alliance. The ruling parties still command a majority in parliament and have the chance to choose a new premier.

The country of almost 2 million people — a European Union, euro-region and NATO member — has endured protests over government plans for the health-care industry and ailing airline AirBaltic. The Unity-led cabinet had been trimming the budget deficit and has overseen economic growth that neared a two-year high last quarter. Latvian borrowing costs fell to a record low this year.

“We’d expect the same coalition to continue — policy implications would be quite limited,” Otilia Dhand, senior vice president at the Teneo Intelligence consultancy in Brussels, said by phone. “Pressure was building from inside the party.”

The government’s euro-denominated bond due 2024 was little changed at 5:48 p.m. in the Latvian capital of Riga, with the yield at 0.924 percent.

‘New Ideas’

Straujuma informed Unity’s board last night by text message that she’d resign, according to Latvian TV, which didn’t say where it got the information. She spoke this morning with President Raimonds Vejonis at a meeting announced 30 minutes beforehand.

“I believe there’s a need for new ideas, new energy and contributions to do the ongoing work,” Straujuma said during the televised meeting with Vejonis. She’ll take a seat in parliament after a new government has been approved.

Vejonis, who’ll name the next prime minister, called on all parliamentary parties to propose candidates and potential governing coalitions after the departure of Straujuma. He set meetings about the new government with parties for Dec. 10-11.

Straujuma told reporters Monday in Riga that Interior Minister Rihards Kozlovskis could be a good successor. Foreign Minister Edgars Rinkevics, who’d also been mentioned by Straujuma in the past, ruled himself out.

Kozlovskis is a “team player and this is a question for the Unity board,” Daiga Holma, spokeswoman for the interior minister, said by telephone.

When asked about Kozlovskis becoming prime minister, Unity party leader Solvita Aboltina objected, saying “we don’t live in a monarchy where the king chooses his successors,” according to the Leta news service. Local media have speculated that Aboltina is among potential replacements for Straujuma.

Political Rows

Vejonis thanked Straujuma for her work, while criticizing “domestic political disputes” that ended the government’s term early.

Straujuma fired Transport Minister Anrijs Matiss on Nov. 4 over plans to extend an 80 million-euro ($87 million) loan to AirBaltic for new aircraft, and the potential purchase of a minority stake by a private investor.

“Although we believe risks to government stability have recently increased, we do not expect a major shift in policy direction,” Standard & Poor’s said Nov. 27 in a statement. “Latvia will continue to benefit from generally effective policy making, with common goals shared across the political spectrum.”