Bloomberg News

Latvia Can Meet Euro-Entry Terms on Time, Finance Chief Says

October 31, 2011

(Updates with GDP forecast in first paragraph.)

Oct. 31 (Bloomberg) -- Latvia can meet the terms of its planned adoption of the euro by the 2014 deadline and may exceed next year’s 2.5 percent economic-growth forecast, Finance Minister Andris Vilks said.

The government’s 2012 growth estimate is “very conservative,” Vilks told reporters today in Stockholm, adding that he “wouldn’t be surprised” if this year’s budget deficit was 3.5 percent to 4 percent of gross domestic product “or even better.”

To adopt the euro on schedule, Latvia must approve additional austerity measures to narrow the 2012 budget shortfall to 2.5 percent of gross domestic product. Since turning to a group led by the European Commission and the International Monetary Fund for a 7.5 billion-euro ($10.5 billion) loan in 2008, the Baltic nation has lowered spending and raised taxes equal to about 16 percent of GDP.

Next year’s budget-deficit target of 2.5 percent of economic output is a “good signal” for the European Union, Vilks said.

--With assistance from Aaron Eglitis in Riga. Editors: Andrew Langley, Alan Crosby

To contact the reporter on this story: Johan Carlstrom in Stockholm at jcarlstrom@bloomberg.net

To contact the editors responsible for this story: Tasneem Brogger at tbrogger@bloomberg.net Balazs Penz at bpenz@bloomberg.net


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