Fitch Ratings says that the final decision of ECOFIN whether or not to invite Latvia (BBB/Positive) to join Eurozone (due by June 9) will trigger country’s sovereign rating review. Agency maintains that euro adoption would deliver net benefits for the Latvian economy and is likely to lead to a rating upgrade.
Fitch’s base expectation is that Latvia complies with Maastricht criteria and will be invited to join Eurozone as of January 1 2014. Convergence report to be published by EC and ECB on June 5 is going to be a strong indication of the formal decision. Fitch reminds that previously no country that has met the quantitative criteria has had its euro bid rejected.
At the same time criteria compliance needs to be “sustainable”, which leaves room for considerations and recommendations, as well as posing the risk that euro adoption could be delayed. The considerations include high level of non-resident deposits, but Fitch believes that government’s commitment to adopting euro would translate into willingness to solve this issue.
Related Articles
Eurozone manufacturing growth hits four-year high in April but Middle East war drives record price surge
Eurozone manufacturing activity expanded at the fastest pace in nearly four years in April as factories rushed to build safety stocks ahead of expected price rises and supply shortages linked to the ... more
Taiwan honours visiting Lithuanian MP
Taiwan’s Foreign Minister Lin Chia-lung has awarded the “Goodwill Diplomacy Medal” to Dovilė Šakalienė, a member of Lithuania’s parliament and former defence minister, in recognition of ... more
Russian GRU parcel bomb plot traced to Estonia
Estonian authorities are considering whether to extradite two residents accused of helping Russian military intelligence (GRU) operatives send parcel bombs that nearly caused major air disasters ... more