Latvia keeping sights on euro

Reuters.

Latvia's Prime Minister Valdis Dombrovskis.

Riga - Latvia intends to join the eurozone, exchanging its lats for the single European currency in 2014.

The Baltic state, which joined the European Union in 2004, laid the legal basis for the move on Thursday with a law providing for the introduction of the euro.

While enthusiasm for the euro remains limited among Latvians, Prime Minister Valdis Dombrovskis explained in an interview with dpa why he is sticking to his target and why he does not believe a referendum on the switch is necessary.

dpa: The Latvian parliament has passed the law for introducing the euro. What is the next step on the road to the euro?

Dombrovskis: We will now ask the European Commission and the European Central Bank for a convergence report on our readiness for the euro. We will do this in February or March. We are still discussing the precise date. The decision on whether we will be able to join the eurozone in 2014 could be made in July. We are optimistic. We have met the Maastricht criteria since September 2012 and will continue to adhere sustainably to the target figures in the future.

dpa: What do you hope to gain from the introduction of the euro?

Dombrovskis: We see many practical advantages. The euro will make Latvia more attractive to foreign investors and we would pay lower rates of interest on the financial markets. Added to that are lower costs and expenditure for currency exchange transactions for our companies, which conduct 70 per cent of their foreign trade with the eurozone. Our people will also benefit when making trips abroad. And the other way round, this would also apply to the countries currently in the eurozone. Our accession is not a one-way street.

dpa: There is widespread scepticism among the Latvian population, with many calling for a referendum on the euro.

Dombrovskis: A referendum on the euro is legally not necessary. We voted in favour of the euro in the referendum on EU accession in September 2003 and committed ourselves to introducing it as soon as we met the conditions. Out of the 10 new EU members that have joined the bloc since 2004, five have introduced the euro without holding referendums. So why should we invent new legal procedures?

dpa: What will you do if Latvia's euro application is turned down?

Dombrovskis: Then we will stick with our lats. That is quite obvious. But, at the moment, there are no objective reasons why Latvia could be denied accession. We are also receiving broadly positive signals for our efforts from other member states. If no artificial obstacles are placed in our way, I am confident that we will be part of the eurozone in 2014.

dpa: And this remains your goal despite the turbulence in the currency union?

Dombrovskis: The decision in favour of the euro continues to be the right one. The current crisis is less a currency crisis than a financial and economic one in individual eurozone countries. For this reason, certain sanctions and control mechanisms are being introduced or reintroduced in another form. Measures have also been taken to strengthen fiscal discipline in the eurozone and the EU as a whole, and to improve economic governance. It is important to implement these now. - Sapa-dpa