EU – Baltic States, Financial Services, Latvia, Legislation

The state budget deficit must not exceed Gross Domestic Product (GDP) by more than 3%, total government debt must not exceed GDP by more than 60%, and long-term interest rates must not be any more than two percentage points higher than the average rate among the three EU member states with the lowest inflation rates. Another condition is at least two years of participation in the European Exchange Rate Mechanism II (ERM II), informs LETA.

The main problem at present is reduction of the budget deficit. This year's deficit is planned to be 8.5% of GDP, with a target of six% for next year and 3% for 2012.

In order to ensure a smooth transition for members of the public, it is planned that two currencies, both the lat and the euro, will both be in use for one month after the euro is introduced. However, this will only apply to cash transactions, with an immediate transition to take place for electronic transactions.

In order to hasten the changeover, change in cash transactions for goods and services will be given in euros whenever possible during the transition period.

It will be possible to convert lat coins and banknotes into euros with no commission charge for six months after the introduction of the euro. This will be done through various institutions, including the Bank of Latvia, the Latvian Post Office, and other licensed currency exchange locations.

For three months before and one year after the changeover, all prices will be displayed in both lats and euros.