Bank targets 2013 as Latvia's 'E-day'
UNDER CONTROL: Rimsevics expressed confidence that inflation will fall in 2008 (Photo: Mike Collier)
RIGA -- Governor of the bank of Latvia Ilmars Rimsevics has identified 2013 as the new target date for the switchover from the lats to the euro.
Speaking at the Baltic Financial Forum in Riga on Oct. 26, Rimsevics told his audience of bankers, financiers, analysts and government agencies he was confident that current levels of inflation would soon decrease.
Rimsevics admitted that no-one had foreseen the chain of events that would lead to the current inflation figure of 11.4 percent when Latvia originally submitted its euro application.
"Latvia has a completely different market cycle vis-Ã -vis the rest of the EU," Rimsevics said. "Latvia and some other countries have missed the first window of opportunity to join the EU. Latvia has a very challenging situation, but we know how we got into this situation and we know how to get out," he insisted.
The bank boss added that there was "no doubt" that inflation would begin to decrease early in 2008, and cited real estate price falls of 12-13 percent to back this up.
Speaking of the government's target for a 2012 entry into the euro, Rimsevics said "I think this is very realistic," even though "It will require a big commitment."
However, moments later he added that there was a chance that 2013 might be an alternative date for euro adoption, explaining that the government had also mentioned this date as a fallback possibility.
In an interesting aside, Rimsevics suggested that just because the Baltic economies are bucking conventional economic models, that does not necessarily make them causes for concern.
"There will be a lot of theses and books written about the current macroeconomic situation in Latvia," that would produce "new paradigm and thoughts," he said.
Rimsevics was complimentary about government policy throughout, despite the fact that as he spoke, the People's Party was the only member of the ruling coalition not to have nominated him to continue as governor of the Bank of Latvia. Eventually though, they did give Rimsevics their backing just before the deadline for nominations closed on Oct. 26.