The International Monetary Fund has suspended lending to Latvia until it sees more progress in cutting public spending, the Latvian government confirmed on Thursday.

Latvia is racing to prepare more cuts to keep its €7.5bn ($9.9bn, £6.9bn) stabilisation plan on track and dispel fears that it will be forced to abandon its peg to the euro and devalue the lat, after the IMF postponed transferring about €200m last month.