The failure to raise badly needed capital on international markets will increase pressure on the Baltic state to secure its second tranche of money from the International Monetary Fund.
In December the international institutional agreed to provide Latvia with a €7.5 billion loan but failure to implement budget cuts resulted in a €200 million payment being held up in March.
Prime Minister Valdis Dombrovskis told local media the parliament now plans to accept budget amendments on 17 June so it can receive about 1.2 billion lats (€1.69 billion) of international loans in July.
A recent forecast by the European commission predicted the country's budget deficit could reach as high as 11.1 percent this year.
Following the news of the debt issuance failure, currencies in the region including Poland's zloty and Hungary's forint fell against the euro. The Swedish krona did likewise due to the country's heavy investment in Latvia.
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