RIGA (Reuters) - Latvia's four-party coalition government, facing plunging popularity ratings and a deep economic crisis, neared collapse on Friday after the two largest parties demanded that the prime minister step down.
Political instability has added to the economic problems of the small Baltic state, igniting a riot on January 13. The country had to take a 7.5 billion euro (6.6 billion pounds) IMF-led rescue loan last year.
Mareks Seglins, chairman of the largest coalition party, the People's Party, told reporters he and the second biggest coalition party, the Union of Greens and Farmers, wanted Prime Minister Ivars Godmanis, to step down, saying it was the only way to help boost public trust in the unpopular administration.
Godmanis, who is from the third-largest party in the coalition, was due later to meet President Valdis Zatlers, a spokesman said.
"The People's Party and the Union of Greens and Farmers have said they want to leave the coalition and want a new prime minister. The Prime Minister has asked for a letter confirming this and we are waiting for that now," said Edgars Vaikulis, the PM's spokesman.
Godmanis survived a motion of no confidence vote in parliament earlier this month called by opposition parties.
The veteran politician, who led Latvia when it quit the former Soviet Union in 1991, was rebuffed recently in his attempt to bring an opposition party into the government.
"This means that the government has stepped down," said Andris Berzins, head of the parliamentary faction of Godmanis's Latvia's First Party/Latvia's Way party.
Latvia's crisis, which began during the global credit crunch, has accelerated and the finance ministry has forecast a drop in the economy this year of 12 percent, meaning further painful budget cuts are likely.
The political crisis has struck just as a team from the International Monetary Fund was visiting the Baltic state.
(Reporting by Patrick Lannin and Jorgen Johansson; Editing by Louise Ireland)
