Latvia's Reward for Austerity? Membership of the Euro in 2014
Paterson, Tony, The Independent (London, England)
Baltic state will be 18th to adopt single currency, despite opposition within the country
Latvia will become the 18th country to join the troubled eurozone, in a move seen by the Baltic state's centre-right government as a guarantee of stability and a reward for the tough austerity-measures imposed to help the country recover from a harsh financial crisis.
Announcing the move, Prime Minister Valdis Dombrovskis said yesterday that the European Commission (EC) had given the go ahead for Latvia for adopt the euro from early 2014. "Joining the eurozone will foster Latvia's economic growth for sure," Mr Dombrovskis said.
The EC hopes that Latvia's switch to the euro will signal to investors that the eurozone is growing, despite its debt crisis and the huge unpopularity of austerity measures in countries like Greece, Italy and Spain. "Latvia's desire to adopt the euro is a sign of confidence in our common currency and further evidence that those who predicted the disintegration of the euro area were wrong," Olli Rehn, the European Union's commissioner for economic and monetary affairs, said in a statement yesterday. The EC concluded that Latvia had managed to achieve sustained low inflation, low long- term interest rates and low public debt by enforcing measures which foreshadowed those currently imposed in crisis-hit eurozone countries.
However, opinion polls have shown that most Latvians are opposed to switching currencies because they fear the move will drive-up prices. Anti-euro parties won over half the vote in elections in Riga at the weekend.
The Baltic state, which has a population of just over two million, was one of the hardest hit by the 2008-2009 financial crisis, which burst a property bubble and forced the closure of one of the country's leading banks.
Latvia lost a fifth of its economic output and became one of the first countries to be rescued by a bailout from the European Union and International Monetary Fund. The conservative government subsequently imposed some …
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Publication information: Article title: Latvia's Reward for Austerity? Membership of the Euro in 2014. Contributors: Paterson, Tony - Author. Newspaper title: The Independent (London, England). Publication date: June 6, 2013. Page number: 30. © 2009 The Independent - London. Provided by ProQuest LLC. All Rights Reserved.