'Euro-blues' settle over Baltics

  • 2006-05-31
  • Staff and wire reports
VILNIUS - Baltic financial leaders are now in an extended period of reflection as hopes for early entrance to the eurozone have been dashed and each country plays a guessing game as to when it will finally get to adopt the common currency. In Lithuania, which is still bristling from its recent rejection, Prime Minister Algirdas Brazauskas was quoted as saying that the Baltic state might strive for 2009, since 2008 is looking increasingly unlikely due to rising inflation. Commenting on the situation, President Valdas Adamkus reminded that any goal to adopt the euro would only work if clear plans and actions were implemented and the work of different institutions were coordinated.

Of the three Baltic states, Lithuania had the best chance to see the euro in 2007, but the European Commission and the European Central Bank said in their Convergence Report last month that the average inflation rate in Lithuania during the 12 months to March 2006 was 2.7 percent, 0.1 percentage point above the reference value of 2.6 percent, and therefore unacceptably high. The commission's tough stance drew both fire and praise across the union. On a visit last week in Vilnius, Europe's most renowned euroskeptic, Czech President Vaclav Klaus, said that the slight discrepancy in Lithuania's inflation to the Maastricht criteria forced him to smile. "0.1 percent is far less than a normal statistical mistake," Klaus said at a joint news conference with Adamkus.

The Czech president said he worked in economics for years and had even written a thesis about inflation. He noted that "the euro has problems of its own" and that a postponement in adopting the currency would cause no grief for Lithuania.
In Latvia, which has the highest inflation in the EU, the question about when the country could possibly see the euro remained open to speculation, with estimates ranging from 2009 to 2011. Finance Minister Oskars Spurdzins said Latvia should set a realistic date for its transition to the single currency, but he declined to speculate when that could be. "If we announce a new date, which is quite possible, it is important not to act rashly... so that the new deadline is realistic," he said.

Spurdzins told a news conference that the Finance Ministry was planning to submit to the government a report on the country's macroeconomic situation in two weeks, and that the Bank of Latvia and the Economy Ministry were working on the report. After studying the report the government might announce a new date for adopting the euro.
Spurdzins noted that the date of euro adoption is not an end in itself, and regardless of when the government decides to introduce the single currency Latvia would continue working on the technicalities of the transition.
For its part, Estonia has announced that it will attempt to join the European Monetary Union in 2008.