It now looks like the economy may nosedive by 20 - 35 % for all of 2009. A total economic collapse, sending the country back into the 1990s. Industrial production plummeted 22 %, the hotel and tourist business by 34 % (brilliant move boosting hotel VAT sharply to 21 %).
Unemployment will probably go past 20 %. Tax revenues will shrink drastically, undermining any sharp budget cuts. It will no longer be an issue of whether the International Monetary Fund (IMF) thinks the cuts are sufficient, it will be a matter of no revenue available for public service. The government' s tax revenues will push the public sector salary cuts beyond the 20 to 30 % already decided.
Even the slightest glimmer of opportunity for work anywhere but Latvia will send thousands packing their bags (remember, too, the choice of governance issue). What will be left by 2010 0r 2011 is a sad basket case of a country, where the least skilled workers, through a hopelessly inefficient and understaffed tax system support a skeleton social services and pension system for the old and infirm.
Time to really, really seriously think about a Plan B.
If you can't get it together in 20 years since independence, you probably won't...