There is no doubt that Parex insolvency would have negative impact on the Latvian financial sector. However, the rescue of Parex Bank by the government of Latvia extended the budget deficit that was already rising in that period. After that, the situation in the economy deteriorated. To improve the situation, government has started cutting expenditures and revising earlier forecasts. However these measures, probably too slow and half-hearted, did not bring tangible result, and in November 2008 the government of Latvia commenced negotiations for receiving financial support with the international institutions - the International Monetary Fund and the European Commission.
Part of this money was intended for investments in Parex bank, and for providing guarantees for refinancing of syndicated loans of other banks.