Latvia became the 18th member of Euro Zone

Latvia on 2 January 2014 became the 18th member of the Euro zone. The small ex-Soviet state has been preparing for the switch, since European Union finance ministers formally announced in July 2013 that Latvia could adopt the Euro.

Both Standard & Poor’s and Fitch have raised the country’s credit ratings in anticipation of its euro entry. The economy of Latvia shrank by a quarter during 2008-2010, but then grew at the fastest pace in the EU, expanding by 5.6 percent in 2012, after the government slashed spending and wages and hiked taxes in one of the harshest austerity programs in Europe. Latvia has recently emerged from the financial crisis to become the EU’s fastest-growing economy.

Latvia gained its independence from the Soviet Union in 1991 and joined the European Union and NATO in 2004. It has a population of two million — nearly 30 percent of Russian origin — and annual gross domestic product of 28 billion dollar.

Latvia became the fourth smallest member of the currency area, ahead of Cyprus, Estonia and Malta. Estonia joined the euro zone in 2011 and Lithuania aims to do so in 2015.