Saturday

3rd Dec 2016

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).

Dear EUobserver reader

Subscribe now for unrestricted access to EUobserver.

Sign up for 30 days' free trial, no obligation. Full subscription only 15 € / month or 150 € / year.

  1. Unlimited access on desktop and mobile
  2. All premium articles, analysis, commentary and investigations
  3. EUobserver archives

EUobserver is the only independent news media covering EU affairs in Brussels and all 28 member states.

♡ We value your support.

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.

Interview

Polish government in bid to defund NGOs

Ruling Law and Justice has promised to overhaul the NGO sector. The move could strain relations with Norway, a major donor to Polish civic life.

Column / Brexit Briefing

Davis brings Brexit back to reality

Brexiteers will be shocked to hear the government is considering slaughtering the sacred cow, offering up contributions to the EU budget in exchange for market access.

News in Brief

  1. Talks on wholesale roaming rules to start
  2. Lead MEP Dieselgate committee: Italy and Slovakia will cooperate
  3. Transparency NGO sues EU commission on Turkey deal
  4. Pro-EU liberal wins UK by-election
  5. Finnish support for Nato drops, Russia-scepticism grows
  6. Cyprus talks to resume in January
  7. Documents from German NSA inquiry released
  8. Transport commissioner 'not aware' of legal action on emissions

Stakeholders' Highlights

  1. CESIElects Leaders and Sets Safety & Health at Work and Gender Equality Among the Guidelines For Next Term
  2. European Gaming & Betting AssociationContinues to Grow its Membership and Welcomes its Newest Member Association
  3. ACCASupports the Women of Europe Awards, Celebrating the Women who are Building Europe
  4. European Heart NetworkWhat About our Kids? Protect Children From Unhealthy Food and Drink Marketing
  5. ECR GroupRestoring Trust and Confidence in the European Parliament
  6. UNICEFChild Rights Agencies Call on EU to put Refugee and Migrant Children First
  7. MIRAIA New Vision on Clean Tech: Balancing Energy Efficiency, Climate Change and Costs
  8. World VisionChildren Cannot Wait! 7 Priority Actions to Protect all Refugee and Migrant Children
  9. ANCI LazioRegio-Mob Project Delivers Analysis of Trasport and Mobility in Rome
  10. SDG Watch EuropeCivil Society Disappointed by the Commission's Plans for Sustainable Development Goals
  11. PLATO15 Fully-Funded PhD Positions Open – The Post-Crisis Legitimacy of the EU (PLATO)
  12. Access NowTell the EU Council: Protect our Rights to Privacy and Security