French support for Latvia euro entry

RIGA - During the meeting with French President Francois Hollande and Prime Minister Jean Marc Ayrault on April 19, Latvian Prime Minister Valdis Dombrovskis received confirmation that, in case of a positive convergence report, France will support Latvia’s accession to the single European currency on Jan. 1, 2014. France is also ready to support Latvia’s membership of the Organization for Economic Cooperation and Development (OECD), reports LETA.

During the meeting, Dombrovskis explained in detail to his French colleagues about the economic development indicators of Latvia, emphasizing that Latvia currently fulfills all the Maastricht criteria. Hollande welcomed the fact that Latvia will soon join the euro area, becoming an active and responsible member state of the euro area. “‘Accession of another Baltic State to the euro area will be a great signal from a geopolitical point of view,” said the French president.
Dombrovskis and Hollande were of the same opinion that this step will also help deepen the economic cooperation between the two countries.

Meanwhile, Prime Minister Ayrault stressed that Latvia’s accession to the euro area will be beneficial for both sides, providing additional impetus for economic development in Latvia, as well as a positive signal for partners around the world about increasing confidence in the single European currency.
Both the president and the prime minister of France appreciated Latvia’s achievements in overcoming the consequences of the financial crisis, the recovered competitiveness and stable growth.

The officials also discussed bilateral relations between Latvia and France, emphasizing that, in view of the fact that France is the one of the world’s largest economies, there are great opportunities for the two countries to expand trade. Currently, France is just the 19th most important trading partner of Latvia. The officials mentioned transport, logistics and tourism as the sectors with a great potential to deepen the economic cooperation between the countries.
Hollande and Dombrovskis welcomed the initiative to organize a visit for French entrepreneurs to Latvia next year to familiarize themselves in detail with the opportunities for cooperation offered by Latvia.

Data support accession
Data released this week show that Latvia is successfully implementing the Maastricht criteria so that it could join the eurozone next year, Swedbank chief economic expert Lija Strasuna told the business information portal Nozare.lv. She said that according to Eurostat data, Latvia has the third lowest annual inflation in the EU, at 1.6 percent, which is in accordance with the Maastricht criteria.

Strasuna said that it is most likely that the European Central Bank and the European Commission will use March’s data in their convergence reports, but it is likely that April’s data will be very similar.
Latvia is planning to adopt the euro on Jan. 1, 2014. The parliament supported the euro adoption bill in the final reading on Jan. 31.

In order for Latvia join the European single currency, it must implement several criteria called the Maastricht criteria. One of the criteria, according to the Maastricht Treaty, states that no country will be allowed to adopt the euro if its inflation is more than 1.5 percentage points higher than the average of the three ‘best’ performing member states of the European Union. Under the Maastricht criteria, a country that wishes to adopt the euro must have a total government debt not exceeding 60 percent of GDP, and its budget deficit cannot exceed three percent of GDP.