RIGA, Feb 26 (Reuters) - Latvia's newly nominated prime minister said on Thursday the government needed to further cut the budget or funding from international lenders could be endangered.
He also rejected any idea that devaluation would help the country and its economic woes.
"I do not support a devaluation of the lat in the current situation," Valdis Dombrovskis told reporters. "We need a reduction of about 700 million lats ($1.26 billion) in the (budget) deficit, otherwise the state faces bankruptcy," he added.
He also said that the previous government had not done enough to meet the requirements set by the International Monetary Fund (IMF) as part of 7.5 bln euro rescue deal agreed last year.
"Unless new large budget cuts are made, the funding (from the international lenders) could be halted", he said.
"Further support is linked to budget cuts," he added.
He said his talks on forming a new government with other political parties would be tied to support to 2009 budget amendments to make the necessary spending cuts or finding a way to raise revenue.
He had already met representatives from the IMF and they had said that a March 31 deadline for the budget amendments was not set in stone. He added that this meant the budget changes could be presented a couple of months after the end of March.
The former finance minister said he would hold about two weeks of talks to form a new government, which would then have to win a vote of confidence in parliament.
($1=.5572 Latvian Lat) (Reporting by Patrick Lannin; editing by Stephen Nisbet)