RIGA - Latvian businesses will benefit from the introduction of the euro currency planned in 2008, a number of economists at a conference in Riga last weekend said.
The director of Fidea consultancy, Viesturs Kulikovskis, said at the conference - European Union Competitiveness and the Euro, organized by the People's Party - that introduction of the euro would give businesses more benefits than drawbacks.
He said that trade and investment costs would be reduced, as currencies would have to be exchanged less. Although this is only a technical change, businesses would benefit greatly, he argued.
Kulikovskis said that the reduction of currency risks was a significant gain from introducing the euro, easing investment projects and banking loans, as well as financial reports.
The head of the Bank of Latvia's monetary policy administration, Helmuts Ancans, said that by introducing the euro, the competitiveness of Latvian businesses would rise. The positive sale results of Latvian products in other EU countries proves this. Interest rates on loans should drop as a result of the euro, leveling with rates in other EU countries. Thus financial resources will become cheaper and more accessible.
Ancans added that local interest rates would, however, level with EU rates only gradually.
Kulikovskis also stated that the return on investments would decline along with economic stabilization, and in three or four years profits from investment projects should be similar to that of today.
Drawbacks from euro introduction were also inevitable. Both specialists admitted that Latvians and Latvian businesses would most likely undergo a price-rise, but this should not be too large. Another drawback would be the increased dependency on fluctuating currency rates with the U.S. dollar.
