MercoPress. South Atlantic News Agency

Latvia becomes the 18th member of the Euro club: not all Latvians convinced

PM Valdis Dombrovskis: a “big opportunity” for Latvia's economy

Latvia woke up to both a New Year and a new currency Wednesday after the ex-Soviet Baltic state swapped its cherished 'lats' for the euro at midnight, becoming the 18th member of the troubled Euro-zone. The entry of the country of two million people capped another turbulent year for the Euro zone, recovering gradually from a crippling debt crisis and ensuing recession.

 But despite the fanfare, with a spectacular firework display illuminating the sky over Riga, many in Latvia bade a reluctant farewell to the lats, seen as a proud symbol of independence from the crumbling Soviet Union.

With fears over possible price hikes and uncertainty about joining a bloc in crisis, polls show that only around a quarter of Latvians are enthusiastic about adopting the euro as their currency.

Half oppose the third currency switch in just over two decades, as they join a club in which five of its members have been forced to seek an international bailout in recent years.

Nevertheless, Prime Minister Valdis Dombrovskis, who has pushed through a bruising set of austerity measures to meet the stringent criteria for joining the bloc, hailed it as a “big opportunity” for Latvia's economy as he withdrew a crisp new 10-Euro note after midnight.

Avoiding excessive debt through “responsible” spending was key to any future success, he warned.

Not everyone shared his optimism, however.

European Commission President Jose Manuel Barroso praised Latvia's “impressive efforts” and “unwavering determination”, as he welcomed the newest member of the Euro zone -- now a bloc of 333 million Europeans.

And European Central Bank chief Mario Draghi told AFP that Latvia was “a role model as far as fiscal adjustment is concerned.”

Like the crisis-hit Euro zone, which expects to limp back to growth some time in 2014, Latvia was hit hard by the 2008-9 world financial crises. It endured the world's deepest recession when GDP shrank by nearly a quarter over the two years.

Dombrovskis, who deftly steered Latvia towards the Euro, orchestrated a 7.5 billion-Euro international bailout to avert bankruptcy, but at the price of deep austerity cuts.

Latvia bounced back to top EU growth charts with two consecutive years of five percent growth in 2011-2012. A four percent expansion is expected for 2013.