Special Report: Global Financial Crisis

    BRUSSELS, Jan. 8 (Xinhua) -- The European Commission on Thursday proposed granting a medium-term loan of 3.1 billion euros (4.2 billion U.S. dollars) to Latvia to lift the nation out of financial crisis.

    The loan, which needs to be approved by all European Union (EU) member states, comes from the 7.5-billion-euro (10.2 billion dollars) contribution put together by the EU, the Nordic countries and the International Monetary Fund (IMF).

    The planned financial assistance demonstrates EU's solidarity with a member state, said EU Economic and Financial Affairs Commissioner Joaquin Almunia.

    The assistance is conditional on a major economic adjustment program already adopted by the Latvian government, designed to limit and progressively correct budgetary and other imbalances, the commission said.

    "Ultimately, it will put the Latvian economy on a sounder and more sustainable footing," it said.

    The Latvian economy has been severely affected by the global financial meltdown.

    EU finance ministers will discuss the proposed loan later this month. If approved, it will be disbursed in six installments over the next two years.