Tuesday

22nd Aug 2017

Euro membership is 'guiding light' for Latvia reform

The euro has been "a guiding light" for economic reform, Latvia's central bank governor told MEPs on Tuesday (26 February)

Speaking at a hearing with MEPs on the European Parliament's Economic committee, Ilmars Rimsevics, the Governor of Latvia's central bank, described the eurozone as "a stable and big ship" adding that "Latvia would like to join that".

Thank you for reading EUobserver!

Subscribe now and get 40% off for an annual subscription. Sale ends soon.

  1. €90 per year. Use discount code EUOBS40%
  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.

  • Latvia - the eurozone's next member? (Photo: European Commission)

Rimsevics and Andris Vilks, the country's finance minister, were pushing Latvia's credentials as part of the government's bid to join the eurozone at the start of 2014. The Baltic country would become the 18th member of the eurozone and the first new country to join since neighbouring Estonia joined the currency club in 2011.

Vilks said that Latvia wanted to be part of the political response to the eurozone debt crisis. "We do not want to wait for the euro crisis to pass," he said, adding that "we want to participate and solve the problems together."

The Latvian economy is one of the few success stories in the EU, growing by 5.2 percent in 2012, according to the European Commission's Winter Forecast making it the fastest growing economy in the EU. With a budget deficit of 1.5 percent and net government debt standing at 42 percent of GDP, Latvia comfortably passes the test posed by the Stability and Growth Pact (SGP).

Last month, the Latvian parliament adopted laws enshrining the balanced budget 'golden rule' set out in the fiscal compact treaty in national law. The bill requires EU governments to keep debt and deficit levels below the 60 percent and 3 percent thresholds in the SGP.

It has also established a changeover timetable to switch from the Lat to the Euro.

Latvia's economic output fell by 17.7 percent in 2009 as a result of the financial crisis. It was the sharpest economic contraction in the EU. Although the crisis led the country to request a €7.5 billion bailout from the IMF, Latvia required only €4.5 billion of the rescue package.

Referring to this, Rimsevics commented that "by not being in the eurozone in 2008, Latvia unfortunately had to go through quite a deep and severe economic and financial crisis."

Public opinion is currently divided on whether to adopt the single currency. Rimsevics conceded that around 30 percent were in favour of euro membership compared to 33 percent against. He said that the government was "determined to increase support to 50 percent by summer this year."

Latvia's euro membership bid is likely to be widely supported by MEPs who will table a consultative report before government ministers decide on the issue.

Centre-right MEP Jean-Paul Gauzès said that joining the euro would send "a message of hope and trust for this country that has made remarkable efforts to master the crisis, to relaunch growth and fight unemployment."

Meanwhile, Burkhard Balz, the German centre-right deputy tasked with drafting Parliament's opinion, said that Latvia's response to the crisis - consisting of harsh spending cuts - sets an "exceptionally good example for everyone."

Latvia submits bid to join euro in 2014

The Latvian government has 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.

'Killer robots' are not about Terminator

A European signatory of an open letter about autonomous weapons says the imagery of fictional killer robots is distracting from a seriously dangerous issue.

Opinion

Macron goes east to test appetites for EU integration

The next few months will be decisive in selecting who stays in the core of the EU and who stays behind, writes Tomas Prouza, a former state secretary for European Affairs of the Czech Republic.

News in Brief

  1. Austria has begun checks at Italian border
  2. Slovenian PM: Brexit talks will take longer than expected
  3. Merkel backs diesel while report warns of economic harm
  4. UK to publish new Brexit papers this week
  5. Macedonia sacks top prosecutor over wiretap scandal
  6. ECB concerned stronger euro could derail economic recovery
  7. Mixed Irish reactions to post-Brexit border proposal
  8. European Union returns to 2 percent growth

Stakeholders' Highlights

  1. European Jewish CongressEuropean Governments Must Take Stronger Action Against Terrorism
  2. European Healthy Lifestyle AllianceDoes Genetics Explain Why So Few of Us Have an Ideal Cardiovascular Health?
  3. EU2017EEFuture-Themed Digital Painting Competition Welcomes Artists - Deadline 31 Aug
  4. ACCABusinesses Must Grip Ethics and Trust in the Digital Age
  5. European Jewish CongressEJC Welcomes European Court of Justice's Decision to Keep Hamas on Terror List
  6. UNICEFReport: Children on the Move From Africa Do Not First Aim to Go to Europe
  7. Centre Maurits CoppietersWe Need Democratic and Transparent Free Trade Agreements Says MEP Jordi Solé
  8. Counter BalanceOut for Summer, Ep. 2: EIB Promoting Development in Egypt - At What Cost?
  9. EU2017EELocal Leaders Push for Local and Regional Targets to Address Climate Change
  10. European Healthy Lifestyle AllianceMore Women Than Men Have Died From Heart Disease in Past 30 Years
  11. European Jewish CongressJean-Marie Le Pen Faces Trial for Oven Comments About Jewish Singer
  12. ACCAAnnounces Belt & Road Research at Shanghai Conference