Euro means stability: Latvian finance minister

Latvia's planned entry into the eurozone in 2014 will boost national economic stability, Finance Minister Andris Vilks said on Thursday.

"Primarily it means stability. It will remove any speculation about currency devaluation," Vilks said in an interview broadcast on the website of his centre-right Unity party.

Vilks brushed aside calls for a referendum on euro adoption as "inappropriate" and repeatedly pointed to neighbouring Estonia -- which joined the eurozone in 2011 -- as a positive example.

"Any price rises will be absolutely minimal... In Estonia inflation is slightly higher (than in Latvia), but that is nothing to do with the euro, that's just part of the economic cycle," he said.

The government argues that despite the eurozone debt crisis it makes sense for a small economy such as Latvia -- population two million -- to join given that its main trade partners are already inside.

But with a survey released on Thursday by pollster TNS showing just 10 percent of Latvians support euro adoption as soon as possible, with 35 percent against it at any time, Vilks admitted that the authorities needed to do a better job of selling the benefits.

"We understand that people like using the Latvian lats and that it is an important symbol," he said. "We need to use the maximum number of channels to communicate from our side."

Latvia aims to become the eurozone's 18th member on January 1, 2014.

The lats was reintroduced after Latvia won back its freedom in 1991 following five decades of Soviet rule.

The government has brushed off calls from the left-leaning opposition for a referendum, underlining that the public backed the eventual adoption of the euro as part of a wider 2003 plebiscite that enabled Latvia to join the European Union the following year.

The lats is pegged to the euro.

Latvia has been hailed by the International Monetary Fund as an example of austerity bearing fruit thanks to its early completion last year of a three-year, 7.5-billion-euro ($10 billion) bailout.

The rescue followed Latvia's swing from breakneck growth into the world's deepest recession -- output shrank by a cumulative 25 percent in 2008-2009.

During the crisis the government chose not to devalue the currency, a tactic sometimes used to make a country's exports more competitive.

Instead, it opted for austerity measures far beyond those in other embattled European economies.

While its economy is yet to recover to pre-crisis levels, Latvia's rebound has pushed it to the top of the EU growth table, with growth forecast at 4.3 percent this year.

--

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