Latvian debt crisis shakes Eastern Europe Latvian debt crisis shakes Eastern Europe - Telegraph Latvia has become the first EU country to face a sovereign debt crisis after failing to sell a single bill at a treasury auction worth $100m (Â£61m), prompting fears of a fresh storm in Eastern Europe as capital flight tests currency pegs. ... The finance ministry expects GDP to contract 18pc this year. House prices have fallen 50pc , the worldâ€™s most spectacular crash. A third of the countryâ€™s teachers are being fired and public salaries will be slashed by up to 35pc to meet bail-out terms imposed by the IMF and the European Commission. The policy risks a deflation spiral that defeats its own purpose. The dominos continue to fall in Eastern Europe.... how long until something like this in Lithuania?