Latvia Meets All Terms for 2014 Euro Adoption, Dombrovskis Says

Latvia, which is seeking to become the 18th country to adopt the euro, meets all conditions for the switch next year, Prime Minister Valdis Dombrovskis said.

The Baltic nation is ready to be evaluated on its preparedness to become part of the common currency, Finance Minister Andris Vilks said today. The Cabinet will decide March 4 on an application for a convergence report that will deliver the European Union’s verdict on whether the country meets the terms, he said. Dombrovskis and Vilks spoke at a conference in the capital, Riga.

With the euro-region debt crisis abating, the EU’s eastern members are reviving their bids to join the currency. Latvia’s Baltic neighbor Lithuania plans to start using the euro in 2015 and Poland has also reiterated plans to make the switch later. In the former communist east, Slovenia, Slovakia and Estonia are already using the euro.

Latvia’s inflation rate will drop to 1.9 percent this year and climb to 2.2 percent next year, the European Commission said in its winter forecasts today. Still, the core inflation rate is rising toward the headline number on higher wages and employment, the commission said.

The economy will grow 3.8 percent this year and 4.1 percent in 2014, the commission said. “Robust” economic growth will cut the budget deficit to 1.1 percent of gross domestic product this year and 0.9 percent in 2014, according to the report.

To contact the reporter on this story: Agnes Lovasz in London at alovasz@bloomberg.net

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