The Baltic country already meets state-debt and budget- deficit thresholds, the Washington-based lender said today in an Article IV and staff report.
“Prospects for meeting the inflation and interest rates are more uncertain, since these criteria depend on the EU institutions’ determination of the countries to be used for the reference value calculation,” the IMF said. Representatives from the European Commission and European Central Bank “assured the authorities the criteria would be applied fairly.”
Latvia agreed on a 7.5 billion-euro ($10.1 billion) bailout in 2008 after its second-biggest bank needed a state rescue and a real estate bubble burst. It kept its currency, the lats, pegged to the euro even as the economy plunged by more than 20 percent in 2008-2009, the biggest collapse in output in the world at the time.
Gross domestic product, which advanced 5.7 percent in the first three quarters of 2012, may expand 3.7 percent this year, before accelerating to about 4.2 percent in 2014-2015, the IMF said.
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