Friday

15th Dec 2017

Latvia presses ahead with 2014 euro bid

  • Latvia - the 18th member of the eurozone? (Photo: Stephen Downes)

Latvia has moved a step closer to joining the euro after its national parliament backed two laws paving the way for the Baltic country to become the 18th member of the single currency.

Latvia‘s parliament, the Saeima, passed legislation on fiscal discipline, which enshrines the balanced budget 'golden rule' to keep government debt and deficit levels below the 60 percent and 3 percent thresholds, as well as a bill detailing the timetable to switch from the Lat to the euro on Thursday (31 January).

Thank you for reading EUobserver!

Subscribe now for a 30 day free trial.

  1. €150 per year
  2. or €15 per month
  3. Cancel anytime

EUobserver is an independent, not-for-profit news organization that publishes daily news reports, analysis, and investigations from Brussels and the EU member states. We are an indispensable news source for anyone who wants to know what is going on in the EU.

We are mainly funded by advertising and subscription revenues. As advertising revenues are falling fast, we depend on subscription revenues to support our journalism.

For group, corporate or student subscriptions, please contact us. See also our full Terms of Use.

If you already have an account click here to login.

The move comes after Prime Minister Valdis Dombrovskis recently said the government would submit a formal application for euro membership in February or March to the European Commission and the European Central Bank.

The country plans to join the single currency at the start of 2014 and was given a clean bill of economic health by the IMF in a report published earlier this week.

"We are currently fulfilling the Maastricht [euro adoption] criteria with a considerable reserve, therefore I don't see any basis on which this convergence report would be negative," said Dombrovskis.

Latvia abandoned plans to join the euro in 2008 as the country suffered a 24 percent reduction in output as a result of the financial crisis.

The crash, which was the sharpest economic recession in the EU, led the country to request a €7.5 billion bailout. However, Latvia required only €4.5 billion of the rescue package and is now the fastest growing economy across the EU.

In the most recent convergence report published by the European Commission in July 2012, the EU executive found that Latvia did not fulfil the criteria on public finances, price stability, or on central bank independence.

However, with a budget deficit of 1.5 percent and a government debt ratio expected to peak at 45 percent in mid-2013, Latvia is one of the few EU countries, in or outside the euro, to meet the debt and deficit criteria set out in the Stability and Growth Pact.

Meanwhile, the Latvian Lat has been pegged to the euro under the ERM II mechanism since 2005, one year after the country joined the EU.

Latvia would become the second Baltic country to join the euro after Estonia in 2011 and the first to join the single currency since the beginning of the sovereign debt crisis.

Dombrovskis insisted that the decision to join the eurozone "remains correct."

"The current crisis is less a currency crisis and more a financial and economic crisis of individual eurozone countries," he said.

However, public opinion is opposed to joining the single currency. Sixty-six percent of Latvians have a negative attitude towards the euro according to a December survey by pollsters TNS. The last Eurobarometer poll in countries yet to join the currency bloc found that 68 percent of Latvians believed that joining would mean they lose part of their national identity.

Latvia aiming to join eurozone in 2014

After being one of the first EU countries in need for a bail-out in 2008, Latvia is slowly recovering and aiming to join the eurozone on 1 January 2014, the country's newly elected president told this website.

Polish leader cautious on euro entry

Polish leader Donald Tusk has said his country will only join the euro once it is "100 percent ready," with 2017 said to be a target date.

Analysis

EU mulls post-Brexit balance of euro and non-eurozone states

Brexit will dramatically change the balance between EU members states that have the euro and those that don't. The thinking on the future of the eurozone is done at EU-27 level - but opposing camps will have to be reconciled.

Facebook to shift ad revenue away from Ireland

Public pressure about low corporate taxes appear to have pressured Facebook to launch plans to stop routing international ad sales through its Dublin-based headquarters in Ireland.

News in Brief

  1. Juncker: May made 'big efforts' on Brexit
  2. Merkel took 'tough' line on Russia at EU summit
  3. EU leaders added line supporting 'two-state' solution
  4. EU leaders agree to 20 European Universities by 2024
  5. Belgian courts end legal proceedings against Puigdemont
  6. French central bank lifts 2017 growth forecast
  7. EU leaders set to move Brexit talks on to next stage
  8. EU leaders confirm support for two-state solution

Stakeholders' Highlights

  1. Dialogue PlatformThe Gülen Community: Who to Believe - Politicians or Actions?" by Thomas Michel
  2. Plastics Recyclers Europe65% plastics recycling rate attainable by 2025 new study shows
  3. European Heart NetworkCommissioner Andriukaitis' Address to EHN on the Occasion of Its 25th Anniversary
  4. ACCACFOs Risk Losing Relevance If They Do Not Embrace Technology
  5. UNICEFMake the Digital World Safer for Children & Increase Access for the Most Disadvantaged
  6. European Jewish CongressWelcomes Recognition of Jerusalem as the Capital of Israel and Calls on EU States to Follow Suit
  7. Mission of China to the EUChina and EU Boost Innovation Cooperation Under Horizon 2020
  8. European Gaming & Betting AssociationJuncker’s "Political" Commission Leaves Gambling Reforms to the Court
  9. AJC Transatlantic InstituteAJC Applauds U.S. Recognition of Jerusalem as Israel’s Capital City
  10. EU2017EEEU Telecom Ministers Reached an Agreement on the 5G Roadmap
  11. European Friends of ArmeniaEU-Armenia Relations in the CEPA Era: What's Next?
  12. Mission of China to the EU16+1 Cooperation Injects New Vigour Into China-EU Ties

Latest News

  1. Dutchman to lead powerful euro working group
  2. EU mulls post-Brexit balance of euro and non-eurozone states
  3. EU asylum debate reopens old wounds
  4. Estonia completes two out of three priority digital bills
  5. EU countries are not 'tax havens', parliament says
  6. Tech firms' delays mean EU needs rules for online terror
  7. Slovak PM: Human rights are not a travel pass to EU
  8. British PM limps to EU capital after Brexit defeat