Latvia wants to be the 18th country to enter the eurozone on 1 January 2014.
The Baltic country, which joined the European Union in 2004 along with 10 other member states, officially applied to join the economic and monetary union on 4 March.
“I would have preferred [Latvia to enter] the eurozone a long time ago,” said Latvian ambassador to Ireland Peteris Karlis Elferts, who added that since there has been a fixed rate of exchange between the euro and the Latvian lat since 2005, adopting the euro “will be more or less a formality, but a very important formality.”
Ambassador Elferts pointed out that adopting the euro currency would enable Latvia to join the table of decisions with other eurozone countries.
“It will give a lot of stability in an economic sense and a security sense,” he said.
Latvia says it meets all five requirements to enter the eurozone, which include its levels of deficit, inflation and debt, its long-term interest rates and its currency being pegged to the euro.
The country’s application has to be approved by the European Central Bank, the European Commission, EU finance ministers and the Economic and Financial Affairs Council. A final decision is expected to be announced in July. However, opinion polls show that two-thirds of the Latvian population do not want to adopt the euro currency. Interest in the single currency has waned in non-eurozone countries following the financial crisis that has threatened its stability and led some experts to believe it will collapse.
But Ambassador Elferts argued that when the Latvian people decided to join the EU in a referendum held in September 2003, it was also “appointed that we would join the eurozone […] so the people have already [agreed on] that.”
The Baltic state was one of the hardest hit by the financial crisis, experiencing a 24 per cent drop in GDP and a four-fold rise in unemployment.
Latvia received a €7.5bn bailout from the EU and the International Monetary Fund (IMF) in exchange for increasing taxes and cutting spending.
Switching to the euro will be Latvia’s fourth change of currency since the country gained independence from the Soviet Union in 1991.
