Analytics, Economics, Financial Services, Latvia

Valdis Dombrovskis.

He admitted that numerous persons, for example, representatives of foreign banks and former prime ministers, have expressed speculations about the possible devaluation of the lat, however, the current Latvian economy stabilization plan and the agreement with international lenders does not foresee it, Dombrovskis underlined.

As reported, experts of various sectors have expressed their opinion about devaluation of lat possibly bringing benefits to improving the economic situation in the country. For example, entrepreneur and economist Janis Oslejs pointed out in an interview to LETA video that Latvia had to choose between devaluation of the lat and rapid introduction of the euro.

Oslejs explains that the strong Latvian national currency is most devastating to those, who will have to pay back the huge and still growing state debt – the entrepreneurs, who export goods or services. "Devaluation would be the step in the right direction, it would increase our competitiveness and help us to get out of the crisis," Oslejs believes.

An alternative for the devaluation would be introduction of the euro. Latvia could take two directions – either the official one, receiving the consent from Brussels and from the European Central Bank, or to take a unilateral decision. Currently, the strict Maastricht criteria impede implementing the first option, Oslejs explained.

"That would be a current task for Latvian officials and politicians – to lobby the soon introduction of the euro in Eastern Europe. However, if Riga does not come to an agreement with Brussels, Latvia can introduce the euro unilaterally," the economist believes.

Adhesion to the euro area would make Latvia more attractive to investors, would avert the constant concern about the stability of the national currency and would facilitate life for Latvian exporters.

"Euro is a weaker alternative than devaluation of the lat, however it would give certain guaranty of stability for the Latvian economy," Oslejs said.