(corrects family name of first pensioner in para 9)
* Vote to reflect views on bailout, austerity package
* Main Russian minority party expected to win most votes
* Centre-right PM still has chance of forming new government
(Adds polls opened, voters' quotes)
By Patrick Lannin and Aija Braslina
RIGA, Oct 2 Latvians voted on Saturday after
enduring the sharpest recession in the EU, and their verdict
could determine the country's commitment to its IMF-led
austerity programme and the goal of euro entry in 2014.
Before the election for the 100-seat parliament, opinion
polls suggested the centre-right coalition under Prime Minister
Valdis Dombrovskis had a chance of returning to power, probably
safeguarding the austerity plan that came with a 7.5 billion
euro ($10 billion) bailout agreed at the end of 2008.
But an opposition party with strong support among the large
Russian minority hopes anger over the crisis will secure it the
largest share of the vote and a place in government for the
first time since the 1991 fall of the Soviet Union.
The Harmony Centre party has said it would seek revisions to
the loan deal with the International Monetary Fund (IMF) and the
European Union (EU). It also raised the prospect of seeking
funds and investment from countries like China and Russia.
Critics say the party would bring greater Russian influence
in Latvia, a European Union and NATO state since 2004. Harmony
Investors believe a coalition without Dombrovskis, regarded
as the main guarantor of the bailout programme, would carry the
greatest risk of uncertainty. [ID:nLDE6901U8]
Voting began at 7 a.m. (0400 GMT) and ends at 8 p.m. (1700).
Economic output in Latvia, a country of 2.2 million people,
plunged 18 percent in 2009, the biggest drop in the EU.
"I went to vote so that things will change and pensions will
not be cut," said pensioner Pavils Salna in the centre of
capital city Riga. He said he backed Dombrovskis.
Fellow pensioner Solveiga Zhvirble said she voted for
Dombrovskis's coalition partner, the Union of Greens and
Farmers. "I voted for young people and I crossed out (on the
ballot slip) all the old ones who have been there too long."
Despite market fears of uncertainty, analysts do not think
Latvia will abandon the IMF/EU deal, even without Dombrovskis.
They expect any government to realise it needs the international
loans to plug holes in the budget. [ID:nLDE68Q0NS]
For a graphic, click on link.reuters.com/per26p
For a menu of election stories, click on [ID:nLDE68R0XQ]
DOMBROVSKIS SEEN AS CRISIS MANAGER
The coalition is a minority government but an opinion poll
on Monday showed it could return as a majority, with the Unity
bloc led by Dombrovskis as the biggest party.
Dombrovskis wants to re-form the current government with the
Union of Greens and Farmers party and the Everything for
Latvia/For Fatherland and Freedom bloc. [ID:nLDE68S13P]
The IMF and EU programme aimed to reduce the budget
deficit, avoiding a devaluation and paving the way for euro
adoption in 2014.
Domestic critics have said the plan puts too much emphasis
on austerity and not enough on development and investment.
Nordic states, whose banks such as Swedbank (SWEDa.ST) and
SEB (SEBa.ST) are heavily exposed to the Baltic region, also
provided funds for the bailout.
Despite harsh budgets, Dombrovskis has stayed popular and is
viewed as a crisis manager solving problems left by others. He
has an image as an honest man amid cynicism over corruption.
The economy has started to show signs of recovery but tough
budgets will be needed this year and next.
Harmony Centre has sought to woo ethnic Latvians by painting
itself as the main social-democratic alternative. A good showing
by Harmony Centre could persuade Dombrovskis to bring it into
the government to strengthen the coalition's majority.