Latvia has
become the 18th member of the euro currency bloc. The EU approved its bid in
the summer after the Baltic nation bounced back from recession to record
impressive growth.
Latvians
had awaited midnight on Tuesday (2200 UTC) with great anticipation of what 2014
would bring, particularly with the country's transition from the lat to the
euro. Prime Minister Valdis Dombrovskis was scheduled to withdraw the first
euro bills from an ATM in the capital city Riga at a ceremony coinciding with
the new year.
"I am
delighted to welcome Latvia as the 18th member of the euro area," European
Commission President Jose Manuel Barroso said in a statement. "This is a
major event, not only for Latvia, but for the euro area itself, which remains
stable, attractive and open to new members."
ECB Central
Bank chief Mario Draghi called Latvia " a role model as far as fiscal adjustment is concerned," in an interview with the news agency AFP.
A real
estate bubble during the financial crisis of 2008 and 2009 threw Latvia into
recession. In order to avoid bankruptcy, the country's prime minister secured a
bailout from the European Union and the International Monetary Fund (IMF) worth
7.5 billion euros ($10.23 billion) and also steered Latvia toward deep
austerity measures. The move was credited with the country's five-percent
economic growth recorded for the 2011-2012 fiscal year, the top growth rate in
the European Union at the time.
One in four
fear euro
The
introduction of the new currency comes some two decades after Riga adopted the
lat and has concerned some in Latvia of increased foreign influence on the
Baltic country's economy. Moreover, a 5 percent jump in inflation in neighboring
Estonia, which switched currencies in 2011, has raised fears that the euro
could cause more harm than good.
SKDS polls
taken in December indicated that disapproval of the new currency had dropped
slightly among the Latvia's two million inhabitants, falling to about 25
percent.
The ECB has
reportedly estimated inflation to expand by roughly 2 percent in Latvia.
Latvia
joined the European Union in 2005 and was approved to join the euro currency union in early July. It becomes the 18th member of the eurozone, but only the
second Baltic nation and ex-Soviet nation to do so. Lithuania is expected to
join the eurozone at the beginning of 2015.
kms/se (AP, AFP)
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