Latvia Wins European Parliament Support to Join Euro in 2014

The European Parliament endorsed Latvia’s bid to adopt the euro as of January 2014, when the ex-communist Baltic country is due to become the 18th member of the single currency.

Today’s approval by the European Union assembly in Strasbourg, France, sets the stage for a final decision by EU finance ministers on July 9.

Last month, the European Commission said Latvia qualified for euro entry by meeting targets for inflation, budget deficits, debt, long-term interest rates and currency stability. Last week, EU government leaders gave their support.

“I’m very positive about Latvia joining the euro,” Burkhard Balz, a German member who steered the verdict through the 28-nation EU Parliament, told reporters in Strasbourg. “Latvia is the example of how to successfully emerge from a deep crisis with stringent austerity measures.”

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. EU Economic and Monetary Affairs Commissioner Olli Rehn said June 12 that Latvia’s economic rebound highlights the need across Europe to narrow national budget deficits as the region seeks to overcome the three-year-old debt crisis.

Latvian Finance Minister Andris Vilks said adopting the euro will complete Latvia’s strategic goal of being fully integrated in European institutions.

“It’s an anchor for our economy,” he told reporters today in Strasbourg. “We are looking to growth.”

With opinion polls showing most Latvians oppose switching to the euro, Vilks predicted domestic public support would rise to around 50 percent by year-end. He cited the need to avoid an aggravation of the debt crisis triggered by Greece in late 2009.

“People are quite afraid about different potential shocks,” Vilks said. “The best for us is less-concerning news from the euro zone.”

To contact the reporter on this story: Jonathan Stearns in Strasbourg, France at jstearns2@bloomberg.net

To contact the editor responsible for this story: Jonathan Stearns at jstearns2@bloomberg.net

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