The authorities seek to secure Euro entry in 2014
Overview:
The Latvian authorities have completed their program with the IMF. While implementation of the program was sometimes delayed the Latvian economy is, without doubt, in a much stronger position now than it was in 2008. The economy is growing even if the pace of expansion will slow this year. The current account deficit has shrunk dramatically, FX reserves been rebuilt and competitiveness regained through a painful “internal devaluation”. Some problems, though, remain to be resolved. The banking sector is stabilising but has been hard hit by the crisis. Unemployment is now falling but is well above pre-crisis levels. A strong political commitment to maintaining the peg to the Euro and the massive fiscal adjustment enacted to support it could still see Latvia fulfil its target of joining the Euro in 2014.