Latvian Prime Minister asked Swedbank to lend more money to Latvian businesses and households to get the troubled economy back on its feet.

Prime Minister Valdis Dombrovskis met with Swedbank AB’s Chairman Carl Eric Stålberg to ask for more money. Swedbank is the largest bank in the Baltic region and some 40 percent of Latvia’s population of 2.3 million people are customers with Swedbank.

“One of the main questions is the restarting of lending in Latvia” Valdis Dombrovskis said in an interview on Latvian Independent Television, Bloomberg reports.

Last quarter the Latvian economy shrank 18 percent, the steepest slump in the European Union. As recently as 2007 Latvia boasted double-digit economic growth.

Latvia is currently slashing government spending in order to fulfilling the conditions of a 7.5-billion-euro (10.5-billion-dollar) bailout with the International Monetary Fund, the EU and top regional investors including Sweden.

To get the troubled economy back on track Valdis Dombrovskis asked Swedbank to boost lending to households and companies. In the first quarter, lending in the Baltics fell 5 percent, according to Swedbank.

“We give credits as we speak but the demand is not that high as it has been before,” Chairman Carl Eric Stålberg said to reporters after the meeting, Bloomberg writes. “Of course we have to give credit to sustainable businesses and operations.” Swedbank has “a very strong capital situation,” he added.

However, the Stockholm-based bank might be forced to make fewer loans abroad and in Sweden to absorb the cost of bad debts, according several economist and analysts.

Carl Eric Stålberg said that the recession in the Baltic States “will of course affect us” but added that the bank stands strong and aims to maintain a key player in the market.

“We can handle that and we have a big plan for that and we will continue to do our operations here”, he said.