Crisis-hit Latvia faces government shake-up

RIGA Jan 31 (Reuters) - The biggest party in Latvia's ruling coalition called for a government shake-up on Saturday, ahead of a confidence vote called over discontent with the impact of the global economic crisis and corruption allegations.

The popularity of the current four-party coalition has plummeted since Latvia last year became the second EU nation after Hungary to need an IMF-led financial rescue.

The economic woes came on top of discontent with allegations of corruption and nepotism against the government, which exploded into a riot on Jan. 13.

"We think the government and coalition cannot work further with this line up," Maris Kucinskis, leader of the People's Party parliamentary group, was quoted by Baltic news agency BNS as saying.

Kucinskis said the party would on Monday meet Prime Minister Ivars Godmanis to explain why the government needed to be changed and then meet other parties in the 100-seat parliament, including opposition groups, for talks on a wider coalition.

People's Party chairman and interior minister, Marek Seglins, on Friday said it was pointless for the current government to continue.

The People's Party has already called for early elections and analysts have said it might be pushing for the coalition to break up in order to disassociate itself from the financial crisis and help its poll ratings recover.

A recent opinion poll showed that only the opposition New Era and the Harmony Centre Party, which has traditionally had wide backing among the large Russian-speaking population, would make it into parliament if elections were held now.

The current coalition includes the People's Party, the Union of Farmers and Greens, Latvia's First Party/Latvia's Way of Godmanis, and the nationalist For Fatherland and Freedom.

The second-largest party, the Union of Farmers and Greens, has also threatened to quitting the coalition if demands for more aid for dairy farmers were not met.

Tensions in the coalition have emerged ahead of a Thursday vote of confidence in Godmanis called by the opposition.

The government, in office under Godmanis since the start of last year, has come under intense pressure as the economy plunged into recession after the credit crunch hit.

Godmanis struck a deal for a 7.5 billion euro ($9.64 billion) loan led by the International Monetary Fund, but has to make harsh budget cuts, which is increasing the economic woes. (Editing by Jon Boyle)