Latvia to be 18th euro member despite single currency’s woes

City A.M. Reporter
LATVIA got the go-ahead yesterday to adopt the euro from 2014, crowning its emergence from an economic crisis and signalling to investors that the Eurozone is set to expand rather than disintegrate.

Yet not all analysts were impressed, with Brenda Kelly of IG Group saying the achievement is “a bit like getting a last minute Titanic ticket”.

Nonetheless, the small Baltic state will become the 18th country to use the single currency from the start of next year once EU finance ministers formally endorse the European Commission’s recommendation at a meeting on 9 July.

“We have concluded that Latvia is ready to adopt the euro on 1 January 2014,” EU economic and monetary affairs commissioner Olli Rehn said.

To adopt the euro, Latvia had to meet five entry criteria: low inflation and long-term interest rates, a stable exchange rate and low public debt and deficits.

The European Central Bank, which does not have any formal say on whether a country can join, but has to issue an opinion, also gave Latvia a positive assessment. But it warned that high foreign deposits in its banks were a risk to stability.

Neighbouring Estonia adopted the euro in 2011, while Lithuania has said it hopes to join the bloc in 2015.