Latvia’s goal to adopt the euro next January has political support from the European Commission and the European Central Bank as the Baltic nation “more than” meets the entry terms, according to Eurasia Group.
Prime Minister Valdis Dombrovskis will probably submit Latvia’s bid for euro accession in the coming weeks, analysts Otilia Simkova in London and Mujtaba Rahman in New York wrote today in an e-mailed note. Risks of opposition parties stalling the process with a referendum are limited, they said.
“In Brussels and Frankfurt, support for Latvian euro adoption on Jan. 1, 2014 remains robust,” Simkova and Rahman wrote. “Given the ongoing euro-zone crisis, the ability of the Latvian government to demonstrate that all the relevant fiscal and monetary policy Maastricht Convergence Criteria have been met is of significant symbolic and political importance and shouldn’t be underestimated.”
Latvia, which exited a 7.5 billion-euro ($10.2 billion) bailout last year, is vying to follow neighboring Estonia by becoming the 18th euro-area member and meets all the criteria it needs to do so, Dombrovskis said Jan. 31. The commission and the ECB make recommendations on whether a country meets the necessary entry terms.
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