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Presently 30 credit unions operate in Latvia, of which 20 credit unions operate in rural municipalities. The outflow of population from the rural areas of Latvia to Riga district or abroad is observed. The key reason for the outflow is better remuneration. The municipal reform implemented by the government, which might render the operation of credit unions impossible in the merged municipalities with the population over 10,000 inhabitants, introduces the uncertainty in the operation of credit unions. Mainly since the existing Law on Credit Unions restricts the establishment of credit unions in municipalities with the population over 10,000 inhabitants. The negotiations between the Association of Cooperative Credit Unions of Latvia and the state-owned joint-stock company "Latvijas Hipotēku un zemes banka" (the Mortgage and Land Bank of Latvia) on mutual cooperation and launching direct issuing of microcredits, which is one of the EU initiatives, have showed no progress. The growth rate of credit unions (11% on average) falls behind the average indicators of the credit sector in Latvia. The growth of credit union portfolios is impeded by the lack of funding for loans, which might be solved by allowing municipal companies and small businesses to open their accounts with the credit unions. [ABSTRACT FROM AUTHOR]