RIGA (Latvia) - THE crisis-plagued Baltic EU state of Latvia on Monday signed a deal to sell part of its greenhouse gas emission allowance to Japan, a Latvian environment ministry statement said.

Under the agreement, Latvia sold 1.5 million greenhouse emission credits to Japan's New Energy and Industrial Technology Development Organization (NEDO) to be used to ensure Japan's compliance with the Kyoto Protocol.

A nation of 2.3 million which expects to see its GDP shrink by 18.0 per cent this year, cash-strapped Latvia is struggling to make deep spending cuts to curb the deficit in its 2010 budget in order to meet the terms of an IMF-led bailout.

The environment ministry declined to specify the value of the deal, but said Latvia will use the proceeds to implement measures toward reducing greenhouse gas emissions.

Unconfirmed reports put the value of the sale at 15 million euros (S$31 million).

Out of 40 million greenhouse emission credits allotted to it for 2008-12, Latvia already sold 11.5 million to The Netherlands, Austria and Spain. -- AFP