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Latvia: Euro to Be Introduced 2014

Published: June 4, 2013; 14:13 · (Vindobona)

Latvia will be able introduce the Euro on January 1 2014. According to diplomats, this is what the EU Commission will recommend on Wednesday in Brussels.

Latvia: Euro to Be Introduced 2014 / Picture: © Flickr

The respective rapporteur of the European Parliament Burkhard Balz regards the country as fit for the Euro. Balz told dpa Insight EU he expected the Baltic country to fulfill the Maastricht criteria. The small country with around two million citizens would be the 18th country of the monetary union, which currently encompasses 330m EU citizens. The currency union was about to collapse in the past years because of the debt crisis in some member countries like Greece. Latvia itself was affected by the global financial crisis at the end of 2008 and threatened by insolvency. A financial crash could only be avoided by international loan commitments in the amount of € 7.5bn.

The EU member states still have to vote on the membershipt. The so-called acceding countries in the middle and east of the continent are obliged to take over the Euro in case the criteria are fulfilled. Only the United Kingdom and Denmark have an exception clause which allows the two countries to stay away from the Euro.

As per the draft by Balz, Riga easily fulfills the Inflation Criterion, according to Eurostat data of March, at 1.6 percent on a monthly average. Despite of the prognosis of 2.1 percent for 2014 being higher, the risks for the price stability are low. According to the spring prognosis by the EU Commission, the Latvian pubic deficit in 2012 was only 1.2 percent of the economic output. For this year a deficit in the same amount is expected. The general government budget deficit is supposed to reach 43.2 percent in the current year, however, the figures are clearly below the limits of 60 percent.