- POSTED: 04 Jun 2014 18:57
- UPDATED: 04 Jun 2014 20:39
Lithuania passed a key hurdle to adopting the euro on Wednesday, winning the backing of the European Commission to become the 19th state to use the single currency from next year.
BRUSSELS: Lithuania passed a key hurdle on Wednesday to adopting the euro, paving the way to become the 19th member of the eurozone in 2015 and confirm its place within the heart of Europe.
The European Commission, with the backing of the European Central Bank, said that Lithuania, the EU's last remaining Baltic country not in the euro, had met all the criteria to drop the litas for the euro on January 1.
Lithuania's adoption of the euro and deeper integration to the EU comes amid widespread apprehension over a resurgent neighbouring Russia and despite doubts over joining a currency rocked by years of crisis.
Only two weeks ago, EU-wide elections to the European Parliament showed a degree of disaffection in some countries with how the European Union works.
EU Economic Affairs Commissioner Olli Rehn praised Lithuania's "long-standing support for prudent fiscal policies and economic reforms" in its quest to meet the strict criteria for euro accession.
"The Commission is therefore proposing that the EU Council of Ministers decide that Lithuania can adopt the euro on 1 January 2015," it said in a statement.
Rehn said he hoped the council would approve the recommendation next month.
Speaking in Lithuania, Prime Minister Algirdas Butkevicius said the given the Ukraine crisis, joining the euro "acquires still greater importance".
"It is one more step towards deeper economic, financial and political national security," he said.
Lithuania tried to join the now 18-member euro area in 2006-07 but was blown off track by the global financial crisis, which thrust the former Soviet republic into deep recession.
Since that attempt, Lithuania has made great efforts to put its public finances in order and meet the bloc's strict criteria for entering the eurozone.
The country, despite being on the verge of joining the eurozone, is classed by economists as part of the emerging Europe region.
They watch this swathe of former Communist countries as part of their focus on emerging markets in general.
The reforms in the country have "led to a striking increase in Lithuanians' prosperity," Rehn said.
The small country of about three million people is expected to see its economy grow 3.4 per cent this year and 4.3 per cent in 2015, putting it among the fastest growing economies in the 28-member European Union.
Better still, it has strong finances, with a budget deficit well below the EU limit of 3.0 per cent of gross domestic product and total debt below the 60-per cent ceiling.
Expectations that Lithuania will say goodbye to the litas, born when the country broke from Moscow's ruble after the Cold War, are already apparent in Vilnius.
Many businesses already post prices in the euro equivalent, a measure that will be obligatory starting in August if the accension timetable is maintained.
But Lithuanian Finance Minister Rimantas Sadzius said that the greenlight from the EU was "only the beginning of the road."
He said: "We must ensure that the euro is welcomed by the residents, and its arrival is smooth."
Rehn said Lithuania's euro entry was a sign of health for the single currency and vindication against eurosceptics.
"In the past years the euro, contrary what many Cassandras predicted, did not break up or lose members but in fact has increased its membership..." Rehn said.
In a separate development on the EU's eastern edge, the commission urged the bloc's leaders to approve formerly communist Albania as an official candidate for membership of the union.