RIGA, Dec 18 (Reuters) - Latvia will apply to join the euro
zone in February, its finance minister told Reuters on Tuesday,
confident that it will be accepted and can overcome domestic
The Baltic country has embarked on a campaign at home and
abroad to convince a sceptical public to support the move and to
remove any EU doubts that it can thrive inside what is currently
a 17-nation currency bloc.
Latvia is one of the fastest-growing economies in the
European Union, recovering from years of austerity following a
20 percent output drop in 2009 after the global financial crisis
"We can look at the past three years. Latvia was
predictable. If we look now, we have the fastest economic
growth, but at the same time, the price growth is very
restrained," Andris Vilks, the finance minister, said in an
"With that, we shouldn't have any negative surprises here. I
think we've earned respect," said Vilks, whose country has been
held up by some as an example to crisis-hit euro zone nations of
how to solve budget deficit problems with political will.
He said Latvia would ask for a European Commission
assessment of its euro readiness in February, the start of the
That would pave the way for a recommendation from the
Commission, and from the European Central Bank, on which EU
leaders would have to vote in June next year.
The ECB is expected to be tougher than the Commission, as it
was on Estonia, which adopted the euro in 2011.
But Latvia says it has the right credentials. The
centre-right government slashed spending and hiked taxes after
the crisis to meet the terms of a 7.5 billion euro bailout led
by the International Monetary Fund and European Union.
It successfully completed the bailout programme last year
and this month repaid back the IMF loan in full, early.
"I try to speak with colleagues and assure them, purely
pragmatically, of what we have accomplished in the Baltics. I
don't speak about states that shouldn't be in the euro zone," he
said, referring to comments in July that Greece should quit the
single currency bloc.
Opinion polls show a majority of Latvians against adopting
the euro. No referendum will be held, but strong public
opposition could be a negative signal to other EU states, who
have to make the decision to back Latvia's adoption of the euro.
"I think the situation will improve in the next months
because information will be widely available," he said. The goal
is that people don't associate the crisis in the eurozone with
the currency as a whole, but with a specific country, he said.
Vilks expects Latvia to have a budget deficit close to 1.5
percent of output this year, well below the 3 percent EU target.
Vilks said Latvia needed to borrow $4 billion in 2013-2014
to refinance its bailout and pay principle on bonds due in 2014.
"We can't say at what moment or how this sum will be split.
(Low) interest rates are an important factor in our decision,"
Vilks said. Latvia borrowed $1.25 billion in bonds earlier this
month to repay almost $1 billion to the IMF.
(Reporting By Aleks Tapinsh. Editing by Jeremy Gaunt.)