Latvia has officially asked the European Commission and the European Central Bank (ECB) for an extraordinary convergence report “in order to assess the readiness of Latvia to the membership in the euro zone.”
The request is one of the steps towards the country becoming the 18th member of the euro area. Provided that the ECB and European Commission issue a favourable report on Latvia’s readiness to join the euro zone, the final political decision could be made by the European Council in July, allowing Latvia to adopt the euro in January 2014.
“Currently Latvia with certainty fulfils the Maastricht criteria, therefore this is the most appropriate moment to ask EC and ECB to assess our conformity to the membership in the euro zone,” the country’s finance minister Andris Vilks said in a statement.
The Maastricht criteria are a set of several macroeconomic indicators – budget deficit, government debt, inflation and interest rate fluctuation. Applicant countries are also required to have spent at least two years in the Exchange Rate Mechanism (ERM2), during which time the exchange rate fluctuations must be kept within a certain range; Latvia entered the ERM2 in May 2005.
Despite being one of the EU countries hit the worst by the global financial crisis, Latvia recovered quickly after adopting austerity measures that included public sector wage cuts and tax hikes, helped by an IMF bailout.
While officials in Riga believe that accession to the euro area will help boost investment, many Latvians fear that the introduction of the euro will result in a higher cost of living, reports in international media said.
(Photo: Steve Ford/sxc.hu)