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Late-learner Latvia plans to join eurozone amid crisis
Published: 21 February, 2012, 14:14
The Latvian (L), Riga City and European Union flags wave at the city council building in Riga (Reuters / Ints Kalnins)
(27.3Mb) embed videoTAGS: Crisis, Politics, Europe, Aleksey Yaroshevsky, Matt Trezza, Economy
Latvia is willing to pay its share in any future bailouts of indebted euro nations, maintaining plans to join the monetary union by 2014. Euroskeptics say the step would be nothing short of economic suicide for Riga.
“I believe that the latest measures in Italy, Spain and Ireland will be successful, but even if new difficulties should arise, we are willing to make our contribution, even if it is relatively small,” said central bank Governor Ilmars Rimsevics, as cited by Bloomberg.
However, Aivars Lembergs, mayor of port-city Ventspils, compares participation in bailout funds to boarding a sinking ship.
“Latvia will have to participate in the bailout fund – and that’s a 4-billion-euro contribution with our GDP at only 14 billion,” he told RT. “I think it’s like we’re being invited to a Titanic – the ship is sinking and we’re being asked to board it and try to take the water out.”
Latvia has only just now started to recuperate from the recession, which made it one of the most economically affected EU countries. It still has the highest poverty-risk rate in Europe, alarming unemployment and a vast gap between rich and poor.
While Poland recently rejected the idea of having the euro by 2014, the Latvian government still firmly believes that the single currency will make its problems go away.
“Latvia has made very clear its intentions to adopt the euro in 2014. All the policy settings in the past two years have been consistent with that,” says David Moore, Resident Representative of the IMF in Latvia.
Economists say that Latvia can meet the euro adoption criteria. What worries them is whether Riga will be able to afford it. Especially with the alarming number of those fleeing Latvia – hundreds of thousands have already left the country in the wake of the recession.
Earlier, Latvia’s Baltic neighbor Estonia went down the euro-path with mixed results. In 2009, Estonia passed austerity measures to meet eurozone accession criteria and it converted to the euro in 2011. A year later, the country’s chancellor of justice reports of lower wages, poor social welfare and some 60,000 children living below the poverty line.
21.02, 13:29
11 comments
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ha ha ha nu ja, pa tiesam nenormalie politiki. Pryehali, Err, seriously latvian lat is tied to euro and it's rate is being held high artificially, your everyday groceries in latvia are more expensive than in the UK, and the countrie's economy is shrinking, most of able population has left for Ireland and other countries even for Russia. there is strong anti russian national policy in the country against some 40% of the population, those people are taking up russian citizenships and if just half of them decide enough is enough and relocate to russia (and they will because they are treated like garbage) who's gonna be left to pay taxes to boost the economy to help the EU the old and the kids and those who have nothing but a bottle of licker and a will to die...absurd!
Latvia was the first country to be bailed out from the EU...
Latvia was the first country to be hit hard by the banksters-inspired financial crisis which started in 2008... has Latvia got that money? Why joining the euro now that the euro is in danger of extinction? I do not consider myself a Euro-Skeptic, I consider myself a Euro-Betrayed... betrayed by the EU governments as they do everything in favour of the banksters, but on this instance I agree with the euro-skeptics saying this move is equivalent to economic suicide...
Latvia, Estonia, Lithuania and Poland should create their own Economic Union and issus a NEW currency called the "LABI" pronounced Lobby. This would effectively compete with the Euro, the Pound Sterling and the US Dollar. Those 4 Nations have a very similar heritage and can amass tremendous manufacturing capability if they can remain free from Unionization and Corruption. Business and Industrial transparency held by a few key Industrial Giants and Entrepreneurs would propel those 4 Nations to be an Economicforce to be reckoned with. People's attitudes need to operate selflessly and with transparency and generosity AND a coalition of these 4 Governments can create a positive business climate, jobs, and legislation that will benefit the middle class. Erase and Hurt any Nation's middle class and you shall have a failed nation.