Latviski English По-русски
Monday 16.07.2018 | Name days: Hermīne, Estere

PM: Eurozone will help Latvia become part of leading EU states

(No Ratings Yet)

Valdis Dombrovskis

“Euro adoption, as a logical EU integration step, was planned in the agreement of Latvia’s joining of the European Union. Unlike the “old” EU member states, Latvia has no so-called “opt-out” or reservations on not implementing a specific policy. The joining agreement provides for Latvia’s joining of Eurozone as soon as the country meets all Maastricht criteria,” – notes PM Valdis Dombrovskis.

He added that January 1, 2014 was set as the Euro adoption date in 2009 – the very peak of the crisis. This helped the economy meet all Maastricht criteria by autumn of 2012.

On Thursday, Jnauary 31, the Saeima decided on the Euro Adoption Law: it was accepted. 52 officials voted for, 40 voted against, 2 officials abstained from the vote.

“Euro adoption is a logical next step in our currently realized macro-economic policy. Even now we are in the Eurozone – more than 80% of household and corporate loans are issued in Euro, more than 40% of deposits are made in Euro. Also, real estate and other valuable asset prices are stated in Euro. More than 60% of our export goes to EU countries, where Euro is the main way of payment,” – said the PM.

According to him, without the risk of Lat’s devaluation and the country achieving its declared goal of macro-economic policy, the state credit risk was also reduced. The Bank of Latvia has calculated that the Euro transition has given countries a 1.5% saving on loan expenses. But if it is so, in Latvia’s case, expenses will only be 1% lower and provide the state budget the saving of approximately 30 million LVL annually.

Enterprises and households will benefit the most from lower interest rates – Euribor will be replaced by Rigibor – servicing loans in lats will become cheaper.

The second national economy benefiting financial saving, according to the PM, will be the cancellation of currency conversion expenses.

According to the outlook of the Bank of Latvia, the volume of investments will grow by 15% by 2020 thanks to the gradual Euro adoption.

With no currency conversion fees and transactions becoming less complicated, external trading volumes increase. If Latvia joins Eurozone in 2014, it is expected that export will grow by 5% by 2020, notes the PM.

Eurozone membership will also ensure Latvia’s stability against economic threats. The ECB can offer Eurozone countries bank liquidity if need be.

When speaking about possible Euro adoption risks and costs, the head of the government mentions two main issues – the payments to the European Stability Mechanism (ESM) and refusal of having an independent monetary policy.

“After joining Eurozone, the first five year payments will reach 200 million EUR and will grow by 124 million EUR more in the following five year. The fund’s money will be used to offer financial assistance to countries that may experience difficulties. Given that the EU and Eurozone countries are closely linked among each other, instability in one country may cause problems in others, as well as negatively affect the entire economy of Eurozone. Before we turn to scepticism about the significance of solidarity and offering assistance, it is worth remembering that the bulk of financial assistance Latvia received as part of the international loan came from the European Commission and the International Monetary Fund. Solidarity is one of Europe’s most basic principles. Let us not forget that our country is not self-sufficient politically and economically,” – said the PM.

“If we want a truly independent monetary policy, we need to separate Lat from Euro. In this case we can clearly conclude that Lat will lose its value. In other words – a truly independent monetary policy de facto means the Lat’s devaluation. So it is no surprise that the parties that previously called for Lat’s devaluation now call out for an independent monetary policy the most,” – said Dombrovskis.

“Euro adoption has a geopolitical aspect to it as well. By joining Eurozone, we will strengthen our belonging to the leading family of states in Western Europe. Eurozone membership means the inclusion in the core of countries that dictate EU’s development. Our role in the EU and the world will grow as well. We will gain better opportunities to participate in the process of making important decisions,” – he concludes.


Leave a reply

  1. J. says:

    A truly sad day in Latvia’s history. We just boarded the Titanic.

Rezekne Council deputies will not be penalized for releasing newspaper in Russian language

The court has lifted fines previously applied by Corruption Prevention and Combating Bureau on nine deputies of Rezekne City Council for releasing a newspaper produced by the council in Russian language in addition to Latvian.

Volume of imported petrol in Latvia down 2% in five months

The volume of motor fuel imported to Latvia in the first five months has declined 2% in comparison with the same period of 2017. The volume of diesel fuel has declined 14.9%.

Corruption watchdog ends case about Bi-2 concert in Riga

Corruption Prevention and Combating Bureau ended in May the case regarding possible misuse of administrative resources on pre-election promotion by Riga City Council in the form of a free Bi-2 concert in Lucavsala.

Thailand's rescued boys honour casualty of 17-day rescue operation

In Thailand, a 12 boys trapped in a cave have been rescued in a rescue operation that lasted for 17 days and ended with one casualty, a rescue diver.

Latvian political party Progresīvie to nominate women as candidate list leaders

Latvia political party Progresīvie has revealed its list of candidates for 13th Saeima elections. Five women have been stated as leaders of candidate lists.

Estonia earns 150 000 euros from military evaders annually

Estonian compulsory military service is evaded by about 1 000 young men each year, who have to pay fines that annually exceed the combined total of 150 000 euros.

Chairman: FCMC’s competence should end with termination of licenses if banks are liquidated

In the event of liquidation or insolvency, Finance and Capital Market Commission’s competence should end with revoking affected banks’ license and without the need to appoint an administrator, says FCMC chairman Pēters Putniņš.

Minister: Latvia may terminate MPC system in the next three years

In the next three years or so Latvia could completely terminate the mandatory procurement component system, said Economy Minister Arvils Ašeradens in an interview to Rīta Panorāma programme of LTV.

In pictures: French victory in World Cup celebrated by tens of thousands in Paris

After the football World Cup was won by the French national team on Sunday, an enormous crowd of people gathered in central Paris to celebrate.

Another case of African swine fever infection recorded for domestic pigs in Latvia

African swine fever infection was recorded for domestic pigs in Tērvete on Monday, 16 July. 16 pigs were liquidated because of the infection, as reported by Food and Veterinary Service.

MEP Artis Pabriks becomes political party «Attīstībai/Par!» prime minister candidate

Latvian political party «Attīstībai/Par!» has picked Daniels Pavļuts, Juris Pūce, Ilze Viņķele, Artis Pabriks and Mārtiņš Bondars as its regional candidate list leaders. Artis Pabriks will also be the party’s prime minister candidate.

Russian-U.S. presidents meet in Helsinki

U.S. President Donald Trump and Russian President Vladimir Putin are meeting on Monday in Helsinki.

Heat of up to +30° C expected in Latvia this week

Weather in Latvia will be warm and even hot at times this week, as air temperature reaches up to +30° C. At night, air temperature is not expected to go below +20° C. Many regions will likely experience thunderstorms closer to the middle of the week, Environment, Geology and Meteorology Centre reports.

Week in Lithuania. Lithuania's Tripartite Council fails to reach agreement

Lithuania's Tripartite Council on Tuesday, July 10, failed to reach agreement on raising the minimum wage. Employers are inclined to back the government's proposal to raise the minimum pay to 420 euros. Meanwhile, trade unions want it increased to 450 euros.

BNN summary of the week: NATO to increase and ABLV Bank loses its license

BNN offers a summary of this week’s topical news in a variety of categories: Future; Deal; Fight; Decline; Decision; Opinion.

SEB Bank to unite life insurance companies working in Baltic States

SEB Bank will unite life insurance companies working in Baltic States, BNN was told by SEB Bank’s representative Agnese Strazda.

Saeima deputy Askolds Kļaviņš becomes suspect in criminal case

Saeima deputy from the Union of Greens and Farmers Askolds Kļaviņš has been made a suspect in the criminal case regarding abuse of official power.

Minister: E-health system has stabilized, but improvements are still needed

Functionality of the E-health portal has stabilized. Disconnection errors have ceased. Nevertheless, we have to continue improving the system further, said Latvian Healthcare Minister Anda Čakša said in an interview to Rīta panorama programme of LTV.

Six to eight Finance and Capital Market Commission officials may work at ABLV Bank

Six to eight FCMC trusties may work at the liquidated ABLV Bank, says Finance and Capital Market Commission chairman Pēters Putniņš.

Latvia’s Cabinet of Ministers receives expanded draft on deposit system

Environment Protection and Regional Development Ministry has submitted to the Cabinet of Ministers an expanded legislative draft regarding amendments to the Packaging Law and Environment Protection Law for their review in the State Chancellery, as confirmed by the ministry’s representatives.

Latvia will not escape talks on increasing defence spending

It is necessary to develop Latvia’s defensive capabilities. Because of that, Latvia cannot escape talks on increasing defence spending to more than 2% of GDP, said Defence Minister Raimonds Bergmanis, who is participating in the NATO summit in Brussels.

Russia extends food product embargo until end of next year

On Thursday, 12 July, Russian President Vladimir Putin decided to extend the embargo on food product imports from countries of the European Union and other countries until the end of next year.

Heat in Latvia to remain for longer; thunderstorms and heavy rain expected, as well

Next week in Latvia will be appropriately hot for summer, as air temperature is expected to reach +30° C at times. Nevertheless, most of Latvia will experience rain and thunderstorms, as reported by State Environment, Geology and Meteorology Centre.

US President announces «tremendous amount of progress» in defence spending matter

On Thursday, 12 July, US President Donald Trump announced having achieved a great deal of progress in the NATO member states’ defence spending matter during the summit.

Providus: it is impossible for Latvian parties to attract large funding honestly

«If we look at political parties’ ability to attract funding from large companies, for example, conclusions are rather sad – there is no way for parties in Latvia to attract funding in an honest way,» Providus think tank researcher Iveta Kažoka said in an interview to BNN.

Newest comments