Latvia makes formal bid for eurozone entry

(RIGA) - Latvia on Monday signed its formal bid to join the troubled eurozone, with plans to ask the European Commission to assess its euro-readiness in Brussels on Tuesday.

Prime Minister Valdis Dombrovskis, Finance Minister Andris Vilks and central bank governor Ilmars Rinkevics signed the document at a ceremony in Riga, paving the way for the Baltic state of two million to become the 18th eurozone member.

"Faster economic growth is possible if Latvia is inside the eurozone," said Vilks characterising the move as "historic".

Having made eurozone entry the centrepiece of his four years in power, Dombrovskis on Monday waved aside concerns that the political impasse in Italy might lead the eurozone into a new crisis.

"From time to time there are political problems in eurozone member states, but that's all part of the democratic process -- it doesn't make us reconsider our eurozone accession," he told AFP.

Financial experts from the European Commission are expected in Riga to check Latvia's books in coming weeks.

Their report will be submitted to the European Commission and Europe's finance ministers for approval in June before being passed on to the European Central Bank which will deliver its own verdict in July.

"Latvia is expected to meet the Maastricht convergence criteria in the spring of this year and thus appears to be firmly on track to adopt the common currency on 1 January 2014," Nordea bank said in an assessment released Monday.

If all goes to plan, Latvia will replace its currency, the lat, with the euro on January 1, 2014, exactly three years after neighbouring Estonia became the most recent member of the eurozone.

Latvian lawmakers have already approved a transition plan that covers details of how the currency switch is to take place, such as the length of an interim period during which prices will be displayed in both currencies.