Latvia to Join Euro Zone on Jan. 1

from The Wall Street Journal..

July 9, 2013


BRUSSELS—Latvia crossed its final hurdle Tuesday and is set to become the 18th member of the euro zone on Jan. 1, despite meager public support for adopting the single currency at home.

European Union finance ministers formally approved Latvia’s membership during a meeting in Brussels, in what they described as a bright moment for the recession-ridden bloc.

Latvia is the second ex-Soviet state to join the common currency, after the entry of its northern neighbor, Estonia, in 2011. For both countries euro-zone membership helps bind them tighter with Western Europe as they seek to create more distance from Russia, their former hegemon.


Latvia’s economy is set to be among the strongest performers in the euro zone next year, with a projected growth rate of 4.1%, according to the European Commission.


“Latvia meets all criteria. It has done very well in reforming its economy and getting its financial sector back on track. They’ve done very, very well,” said the Dutch Finance Minister Jeroen Dijsselbloem, who also heads the Eurogroup of euro-zone finance ministers.

Some observers are more skeptical. The European Central Bank said last month that Latvia’s viability is anything but robust, in part amid concerns about maintaining low inflation rates and because of a hefty reliance on a nonresident deposit base.

Public support is also low. Polls show that a small majority of Latvia’s population opposes membership because of fears of rising prices. There are also concerns the country will be sucked into the euro-zone’s crisis…

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