By Marcin Grajewski
LUXEMBOURG, June 9 (Reuters) - Crisis-hit Latvia could receive the next tranche of an international aid package in late June or early July if it passes agreed extra budget cuts, the European Union's monetary affairs chief said on Tuesday.
EU Monetary Affairs Commissioner Joaquin Almunia said Latvian Finance Minister Einars Repse had assured him the fiscal austerity programme provisionally agreed on Monday would be passed by parliament in an amended budget in mid-June.
The programme provides for cutting the budget deficit by 500 million lats ($992 million) this year and 400 million lats ($794 million) next year so the gap falls below the EU's cap of 3 percent of gross domestic product in the medium term.
Passing the plan in the second reading of Latvia's amended budget would pave the way for the release of the second, 1.2 billion euro ($1.67 billion) portion of the 7.5 billion euro aid package provided by the International Monetary Fund and the EU.
"Provided ... this plan is integrated in the supplementary budget and voted by the parliament, we will go ahead with the second instalment of our financing programme at the end of June or the beginning of July," Almunia told a news conference after a meeting of EU finance ministers.
Latvian Prime Minister Valdis Dombrovskis will present details of the programme during his visit to the European Commission on Wednesday.
The second tranche of the aid package is seen as important for helping the lat currency resist pressure for devaluation and a scrapping of its peg to the euro. Such pressure grew last week when a government debt sale failed.
Almunia voiced confidence Latvian politicians would not shy away from the reforms, which the public is set to find highly unpopular.
"There is no alternative. This programme of adjustment is the only alternative to a worse scenario that is possible in the Latvian economy. I am sure political leaders in Latvia are fully aware of what is at stake," he said.
The government and the central bank are adamant the peg will not be abandoned. Scrapping it would hit individuals and businesses who had taken foreign currency loans as well as the mostly Swedish banks that had extended them. (Editing by Dale Hudson)