Brussels, 26/02/2013 (Agence Europe) - Latvia is applying to join the euro in January 2014 and has briefed MEPs on the budget and structural reforms it has introduced to emerge in good shape from the 2008 financial crisis. It hopes its current good performance, due to the introduction of the reforms, will set an example to struggling eurozone countries.
Ilmars Rimsevics, Governor of the Central Bank of Latvia, said that the way Latvia has emerged from the crisis will be studied because today its economy is growing faster than over the past two years. According to the European Commission's forecasts, it will continue to do so for the next few years. The Commission says that, after increasing by 5.3% in 2012, Latvian GDP is expected to increase by 3.8% in 2013 and 4.1% in 2014 (see EUROPE 10792).
Rimsevics listed the factors that had enabled Latvia to escape from the economic crisis - speedy decision-making, political will from the authorities, solidarity and partnership among trade unions and employers, which ensured acceptance of the austerity measures that Finance Minister Andris Vilks said were of the order of 17% of GDP over three years, two-thirds as spending cuts and one third in tax rises. Ordinary people approved of the measures by voting the government back in - twice. Vilks said the fact that the government had survived two elections was very important.
Latvians are very divided, however, about joining the euro. One third are in favour of the euro, another third reject it and the remaining third are undecided. Rimsevics said the time had come to tell the population about joining the euro, arguing that contrary to fears, joining the euro would lead to greater stability, inflation would not shoot up and the current reforms in the eurozone to deal with the crisis are measures that Latvia has already implemented to deal with the economic crisis at home.
Latvia received €7.5 billion in international balance of payments aid, some €3.1 billion of it from the EU (see EUROPE 9810). (MB/transl.fl)