RIGA - Reacting to a report in the media that Latvia may be tardy in adopting the euro, Finance Minister Oskars Spurdzins said the government would ask EU officials whether the country could join the eurozone in 2008 as planned.
The Russian-language daily Telegraf this week quoted an unnamed source close to the EU Commissioner for Economic and Monetary Affairs Joaquin Almunia saying that Brussels may postpone Latvia's accession to the eurozone for a couple years. The source told Telegraf that the Baltic country's plan to introduce the euro in 2008 was unrealistic.
The newspaper wrote that it had received indirect confirmation of the speculation from European Central Bank President Jean-Claude Trichet, who said that taking new member states into the eurozone without bringing their economies into line with more developed members would cause problems for the EU economy.
Trichet said that both new and older members should be "mutually interested" in assuring that the optimal economic conditions are in place before new countries adopt the euro.
Spurdzins confirmed that there were rumors of putting euro expansion on the back burner in Europe, but it was uncertain. However, he stressed the need for clarity. "There must be clarity about introducing the euro. The worst thing would be if we counted on adopting the euro in 2008 but weren't allowed to do so before 2010," said the finance minister.
He stressed that, at the very least, Latvia needed to know the EU's opinion about eurozone membership before adopting the 2006 budget. Any restrictions that the government was planning to implement to curb inflation, which so far is the only criteria that the country does not meet, would "put brakes on economic development," explained Spurdzins.
"Does it make sense [to restrict economic growth] if it isn't clear whether Latvia will be able to switch to the euro?" he asked.
The finance minister pointed out that the government has not changed its plan for now and intended to introduce the euro in 2008.
Adoption of the euro is mandatory for all 10 new members of the union.
