The country’s Premier-designate, Valdis Dombrovskis, says it could go bust in June if it’s not able to adhere to the budget cuts set out by the IMF - a situation that could delay its ongoing bailout installment package.

Latvia certainly didn’t foresee a crisis of these proportions when it became an independent nation in 1991. But with its economy tumbling by 10.5% during the last quarter, the country received a 7.5 billion euro ($9.5 billion) bailout. The political machine was then thrown into disarray amid haggling over how to implement the necessary cuts that would keep the country’s budget deficit below 5% of GDP.

Dombrovskis is currently heading up a five-party coalition, which plans to cut spending by 360 million lati ($642 million) - well below the 700 million lati needed to achieve that goal. But Dombrovskis argues that the 5% target is unrealistic, as it was based on a 5% economic contraction when current forecasts call for closer to 12%. He wants more leeway from the IMF and is lobbying for a deficit cushion of 8% of GDP instead in order to ensure the next loan payment.

His argument carries some weight, too. If Latvia fails, so too could neighboring economies like Estonia (whose economy just suffered a 9.4% annual fall, the worst in 15 years) and Lithuania, whose GDP contracted for the first time in nine years. It would also impact larger nations like Sweden, which is heavily invested in Latvian banks.

Watch this space. Europe has pumped in billions in stimulus money to stave off an economic crisis, with budget deficits rising as a result (the European Union projects a doubling of the EU budget shortfall to 4.4% of GDP this year). But while some seem content to wallow in their efforts, situations like these show that unfortunately, the job is far from over.