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29th Feb 2024

Latvia submits bid to join euro in 2014

  • Euro-monument in Riga: The Latvian government is convinced of the merits of joining the euro; the public less so (Photo: Pablo Andrés Rivero)

The Latvian government on Tuesday (5 March) officially submitted a request for the EU commission to assess its readiness to join the euro on 1 January 2014, despite public opposition to the move.

"Latvia's decision to request entry to euro area shows how much progress the country has made to get its economy back on track after the 2008-9 crisis," EU economics commissioner Olli Rehn told reporters after receiving the application.

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Latvia in 2009 was the first EU country to ask for an EU-IMF bailout due to the financial crisis that made its economy shrink by 10.5 percent.

Its economy has recovered since, with Rehn noting that Latvia now has the highest GDP growth rate and the second-highest export rate in the EU.

Unemployment, which spiked above 20 percent in 2009, is "steadily falling, even if still high," Rehn said. Last year, Latvia's unemployment rate stood at 14 percent, according to Eurostat.

The European Commission and the European Central Bank are expected to publish their report on Latvia's euro-worthiness by June, with finance ministers set to decide in July whether the tiny Baltic nation can become the 18th member of the eurozone on 1 January.

Rehn's praise for Latvia's "success story" indicates that the report will be positive, the only irritant being public opinion that has grown increasingly negative, with about two thirds of the population now opposing the euro.

The government is not required to hold a referendum, but other member states may point out to the lack of public support when taking the decision, Rehn said.

"Public opinion is always important in democracies, the higher the public support, the more convincing it is for other member states. This is not a membership criteria, but other member states will take it into account," the commissioner explained.

As for the Latvian finance minister, Andris Vilks, he insisted that getting Latvia into the single currency will benefit the rest of the club.

"A new, fiscally prudent country with huge experience in the previous crisis, which has learned a lot of lessons could be a very strong value-added for the eurozone."

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