News / Europe

Latvia to Get Green Light for Eurozone Membership

TEXT SIZE - +
Reuters
The European Commission will give Latvia on Wednesday the go-ahead to become the 18th member of the eurozone from the start of next year, European Union officials said on Monday.
 
The EU executive will publish a report on whether the small Baltic state meets all the criteria for membership of the single currency, which include low inflation and long-term interest rates, a stable exchange rate and low public debt and deficit.
 
Latvia, which underwent one of Europe's toughest austerity programs after a 2008-2009 crisis wiped a fifth off its GDP, meets all the requirements, the Commission will say.
 
“The decision on Latvia is positive,” one EU official said.
 
Policymakers hope the accession of Latvia will send a strong signal of confidence to investors that despite three years of a sovereign debt crisis, the eurozone is set to grow, rather than disintegrate.
 
The European Central bank will also publish its view on whether Latvia should be allowed to join, but it is only the Commission that has the right to make a legal recommendation.
 
Latvia's membership will have to get the approval of EU leaders at their summit in late June, and the European Parliament will also have to be consulted, before EU finance ministers make the accession formal in July.
 
Latvia's Baltic neighbor, Lithuania, is likely to become the nexteuro zone member after Latvia from 2015, a senior euro zone policy-maker said earlier in May. The third Baltic country, Estonia, joined the eurozone in 2011.
 
To adopt the single currency, Latvia reduced its budget deficit to below the EU ceiling of 3 percent of gross domestic product last year, cutting it to 1.2 percent.
 
Its public debt is around 41 percent of GDP, well below the EU ceiling of 60 percent and its currency has been pegged to the euro since it joined the European Union in 2004.
 
To keep the fixed peg to the euro throughout its economic crisis, Latvia underwent a painful internal devaluation, slashed public sector wages, cut spending and hiked taxes.
 
Latvia posted the fastest economic growth in the EU with 5.1 percent year-on-year and 1.3 percent quarter-on-quarter in the last three months of 2012 but it is still one of the poorest countries in the EU, along with Bulgaria and Romania.
 
Latvian officials are keen to join the euro because many mortgages are denominated in the single currency which they see as less risky than the lat in the longer term.
 
Latvia also wants to strengthen its links with western Europe and be less dependent on Russia. Trade links with Russia are still strong but relations between the two countries can be complicated.
 
Moscow often accuses Latvia of violating the rights of the large Russian-speaking minority. Riga wants Russia to recognize the 1940 Soviet invasion as occupation.
 
While officials are keen on the euro, polls show much of the population is worried a switch will drive prices higher and the country will lose power to Brussels.

You May Like

Multimedia Parents of Disaster Ferry Passengers Lash Out at Authorities

Twenty-nine bodies recovered from water but some 270 remain trapped on board More

War Legacy Haunts Vietnam, US Relations

US congressional delegation initiates $84 million Agent Orange cleanup project More

Wikipedia Proves Useful for Tracking Flu

Technique gave better results than Center for Disease Control (CDC) and Google’s Flu Trends More

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
Ukraine, Russia, United in Faith, Divided in Politicsi
X
Michael Eckels
April 19, 2014
There is a strong historical religious connection between Russia and Ukraine. But what role is religion playing in the current conflict? In the run-up to Easter, Michael Eckels in Moscow reports for VOA.
Video

Video Ukraine, Russia, United in Faith, Divided in Politics

There is a strong historical religious connection between Russia and Ukraine. But what role is religion playing in the current conflict? In the run-up to Easter, Michael Eckels in Moscow reports for VOA.
Video

Video Face of American Farmer is Changing

The average American farmer is now 58 years old, and farmers 65 and older are the fastest growing segment of the population. It’s a troubling trend signaling big changes ahead for American agriculture as aging farmers retire. Reporter Mike Osborne says a new report from the U.S. Census Bureau is suggesting what some of those changes might look like... and why they might not be so troubling.
Video

Video Donetsk Governor: Ukraine Military Assault 'Delicate But Necessary'

Around a dozen state buildings in eastern Ukraine remain in the hands of pro-Russian protesters who are demanding a referendum on self-rule. The governor of the whole Donetsk region is among those forced out by the protesters. He spoke to VOA's Henry Ridgwell from his temporary new office in Donetsk city.
Video

Video Drones May Soon Send Data From High Seas

Drones are usually associated with unmanned flying vehicles, but autonomous watercraft are also becoming useful tools for jobs ranging from scientific exploration to law enforcement to searching for a missing airliner in the Indian Ocean. VOA’s George Putic reports on sea-faring drones.
Video

Video New Earth-Size Planet Found

Not too big, not too small. Not too hot, not too cold. A newly discovered planet looks just right for life as we know it, according to an international group of astronomers. VOA’s Steve Baragona has more.
Video

Video Copts in Diaspora Worry About Future in Egypt

Around 10 percent of Egypt’s population belong to the Coptic faith, making them the largest Christian minority in the Middle East. But they have become targets of violence since the revolution three years ago. With elections scheduled for May and the struggle between the Egyptian military and Islamists continuing, many Copts abroad are deeply worried about the future of their ancient church. VOA religion correspondent Jerome Socolovsky visited a Coptic church outside Washington DC.
Video

Video Critics Say Venezuelan Protests Test Limits of Military's Support

During the two months of deadly anti-government protests that have rocked the oil-rich nation of Venezuela, President Nicolas Maduro has accused the opposition of trying to initiate a coup. Though a small number of military officers have been arrested for allegedly plotting against the government, VOA’s Brian Padden reports the leadership of the armed forces continues to support the president, at least for now.
Video

Video More Millenials Unplug to Embrace Board Games

A big new trend in the U.S. toy industry has more consumers switching off their high-tech gadgets to play with classic toys, like board games. This is especially true among the so-called millenial generation - those born in the 1980's and 90's. Elizabeth Lee has more from an unusual café in Los Angeles, where the new trend is popular and business is booming.
Video

Video Google Buys Drone Company

In its latest purchase of high-tech companies, Google has acquired a manufacturer of solar-powered drones that can stay in the air almost indefinitely, relaying broadband Internet connection to remote areas. It is seen as yet another step in the U.S. based Web giant’s bid to bring Internet to the whole world. VOA’s George Putic reports.
AppleAndroid