European Union Economic and Monetary Affairs Commissioner Olli Rehn said Latvia’s rebound from deep recession in 2009 to euro entry due next year highlights the need across Europe to narrow national budget deficits.
“Latvia has come a long way,” Rehn told the European Parliament today in Strasbourg, France. “Determined policy implementation has helped Latvia to return to robust growth and emerge economically much stronger.”
More than three years into EU-wide spending cuts meant to tackle the debt crisis that has threatened the euro, the European Commission is seeking to balance German-led demands for further austerity and calls mainly in southern Europe for more fiscal leeway to help the bloc emerge from a recession. The commission is in charge of enforcing beefed-up EU rules to limit national budget deficits, which can lead to fines.
Last week, the commission endorsed Latvia’s bid to join the euro at the start of 2014, saying the country met targets for inflation, deficits, debt, long-term interest rates and currency stability. European finance ministers must still sign off on the recommendation to let Latvia become the euro’s 18th member.
Latvia suffered from Europe’s deepest recession in 2009, when the nation’s economy contracted 17.7 percent, before posting its fastest growth last year, 5.6 percent.
“Latvia’s prospective euro adoption is a very strong signal to the region, to the euro area and to the global community and world economy at large,” Rehn said. “It underlines the integrity of the euro and proves that determined policy action for sustainable public finances and sustainable growth and job creation do generate concrete results.”
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