Bloomberg News

Latvian Nationalists Question 2014 Euro Adoption, TV Says

December 03, 2012

A Latvian nationalist party that’s part of the ruling coalition hasn’t decided whether it will support adopting the euro in 2014, TV3 reported late yesterday.

The All for Latvia/For Fatherland party hasn’t made a decision on the currency switch, Einars Ciliniskis, the chairman of the party’s parliamentary faction, said in a TV3 television news program. Five of the group’s 14 lawmakers in the 100-member parliament told the television they weren’t convinced the Baltic country has to adopt the euro in 2014.

Latvia, which pegs its currency, the lats, to the euro resisted pressure to devalue in 2008 and 2009 when its economy shrank by more than a fifth. It relied on a loan from the European Union and the International Monetary Fund to pay wages. The country was forced to abandon its goal to adopt the euro in 2008 after inflation exceeded criteria.

“It’s not possible for Latvia to keep inflation really low over the long term” as the economy continues to grow, Finance Minister Andris Vilks said on the television show.

The government, which has 56 seats in the legislature, needs a majority to pass a law on adopting the euro in 2014 over three readings. The proposal was sent to a parliamentary commission after receiving only 51 votes, the television show reported.

Maastricht Criteria

Countries seeking to adopt the euro must meet criteria on inflation, long-term interest rates, budget deficit and government debt.

“It’s clear that all together Latvia needs the euro,” said Nils Usakovs, the mayor of Riga and chairman of the opposition Harmony Center party, in an interview on the Latvian Independent Television program 900 Seconds today. “Yet there is a question if that’s in 2014.”

Calling a referendum on the euro “is possible, I won’t answer now that we will definitely do that,” Usakovs said.

About 13 percent of Latvians support adopting the euro, the lowest level of support since the pollster SKDS began collecting data, according to a survey in August. The poll carried a margin of error of 3 percent, and surveyed 1,003 people.

To contact the reporter on this story: Aaron Eglitis in Riga at aeglitis@bloomberg.net

To contact the editor responsible for this story: Balazs Penz at bpenz@bloomberg.net


Cash Is for Losers
LIMITED-TIME OFFER SUBSCRIBE NOW
 
blog comments powered by Disqus