RIGA - Pushing Latvia further down the road towards finally trading in its cherished lats and joining the eurozone, the Saeima on Jan. 31 endorsed the euro adoption bill in the second and final reading, reports LETA. Fifty-two MPs voted for the bill, 40 voted against it, while two abstained.
Euro adoption would also mean another step in Latvia’s ongoing re-integration efforts with the West.
All MPs who supported the bill were coalition members; those opposing the bill were opposition members and Janis Dombrava of All for Latvia-For Fatherland and Freedom/LNNK, whereas the abstainers were MPs Andris Berzins and Janis Duklavs (both of the Green/Farmers Union).
While debating proposals for amending the bill, the Saeima did not support several compensatory measures to offset a possible increase in prices after the adoption of the euro, as well as a proposal that the euro introduction procedure could not commence without support from two-thirds of parliament members.
Not all smooth sailing
But obstacles, though weakening, still remain in Latvia’s euro path.
On Feb. 1, Saeima Member Iveta Grigule (Union of Greens and Farmers) proclaimed that she would be able to collect signatures from 34 MPs in order to propose a referendum on the euro adoption bill. The opposition MP said that she is “99.9 percent certain” she will be able to collect the necessary signatures to propose of referendum on the euro.
Grigule said that she has carried out discussions on this matter not only with the coalition, but also with three MPs from the coalition.
However, Grigule had to backtrack a little this week, saying that if she fails to collect 34 MP signatures for a referendum, she will instead gather 30,000 signatures from residents and propose the referendum all the same.
Her hesitation in collecting the necessary number of MP signatures comes about due to the latest comments from Harmony Center leaders. Harmony Center has been one of the most vocal voices against joining the eurozone, at least for joining it at this time.
Even so, Grigule says she will nonetheless “go all the way” with her referendum attempt. If it is necessary to collect 30,000 signatures, she will consult lawyers and turn to the Central Election Commission within a month, she warns.
A party dominated by ethnic Russians, Harmony Center MPs have now said that they wills not sign a petition for a referendum on the euro adoption bill, Saeima Group Deputy Chairman Valerijs Agesins said on Feb. 4.
Harmony Center Saeima Group Chairman Janis Urbanovics said this week that Harmony Center is aware that the introduction of the euro was endorsed by MPs supported by the majority of Latvian residents. Therefore, Harmony Center believes that it would be irresponsible to hamper the euro adoption bill.
The euro introduction bill stipulates the period when euros and lats will circulate simultaneously, the period during which price tags will include prices in both euros and lats, altering Latvia’s accounting systems in accordance with the euro requirements, and other related matters.
The bill states that after the adoption of the euro, prices for goods and services will be rounded up or down to the nearest cent.
After the euro is introduced, the euro and the lats will circulate simultaneously during a period of two weeks. After that, the euro will become the only legal tender in Latvia; ATMs will only issue euro bills.
Residents will be able to exchange lats for euros for a period of six months, or indefinitely if lats are exchanged for euros at the Bank of Latvia’s offices. Post offices in rural areas where banking services are unavailable to residents will be exchanging lats for euros during a period of three months. Money in residents’ bank accounts will be automatically converted into euros. Loans in lats will no longer be issued by credit institutions from the day Latvia adopts the euro.
The Bank of Latvia will have to ensure timely minting of euro coins and printing of euro bills, provide credit institutions with the new currency and distribute batches of euro coins. The Bank of Latvia will also be responsible for the withdrawal of lats bills and coins from circulation.
Post offices will be permitted to sell postcards and stamps with the price indicated in lats for a period of one year after the introduction of the euro.
Price tags will show prices in both euro and lats for three months before and six months after the introduction of the euro; receipts and invoices will also show amounts in both lats and euros during this period.
After the euro is introduced in Latvia, all taxes and duties, late payment fees previously set in lats will be converted to euros.
The bill also lays down a procedure for transition from the RIGIBOR index to the EURIBOR index and the related procedures.
The Financial and Capital Market Commission, Bank of Latvia, State Revenue Service and Consumer Protection Center will have to ensure that these requirements are observed during the transition period. Companies that fail to observe the requirements will be fined or have their licenses revoked.
The bill provides a procedure for amending or updating laws and Cabinet regulations, decrees and recommendations, regulations issued by the Financial and Capital Market Commission, Bank of Latvia’s regulations and relevant local governments’ regulations so they remain valid after the introduction of the euro.
Latvia is planning to switch from the lats to the euro on Jan. 1, 2014. According to the Finance Ministry’s information, the euro exchange rate, which the European Council will set in the summer of 2013, will be about the same as it is now: 0.702804 lats per euro.