Swedish banks might be a problem for the success of Latvia’s bailout program, a secret European Commission document shows.

Swedish banks, the largest lenders on the Latvian market, might stand in the way for the crisis-hit country’s recovery by failing to transferring funding to their units in the country, the European Commission writes in a document.

“There is an indication that Swedish daughter banks may be repaying loans to their parent banks, creating significant euro outflows,” according to the confidential draft document obtained by Bloomberg News.

“The successful implementation of the program may be compromised if euro liquidity is drained out of the country.”

Swedish banks as SEB and Swedbank, key players in the market, have lend hundreds of million of kronor to the crisis-hit Baltic states.

In order to pull itself out of the recession pit, Latvia need the Swedish banks to boost lending. Last month Latvian Prime Minister asked Swedbank, with some 40 percent of Latvia’s population as customers, to lend more money to businesses and households to get the troubled economy back on its feet.

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. But this won’t help if the banks keep their doors shut.

“This risk needs to be properly addressed at a meeting with the Swedish parent banks which would commit to maintaining their level of exposure to Latvia,” according to the draft document.

The Commission had prepared the document for the Economic and Financial Committee, a group made up of finance ministry, European Central Bank and Commission officials, Bloomberg writes.

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