| Abstract [eng] |
A country is generally allowed to enter the euro zone after it fulfils the convergence criteria, which requires maintaining price stability, limits on budget deficits, national debt and interest rates, and exchange rates. The introduction of the single currency is an important additional factor supporting the stability of the national economy and finances in turbulent times and at the same time establishing more favourable conditions for the economic growth. However, now there is a very weak possibility that the countries will meet the convergence criteria due to financial crisis in the world. The carried out analysis suggests that the Baltic States will experience problems related to the inflation criteria. In 2007‑2008 Estonia and Lithuania met all the convergence criteria except the one on inflation. In 2008 the average inflation rate in Lithuania was 7.4 percent, when reference value was 3.2 percent. But Latvia did not fulfil criteria of inflation and budget deficits: budget deficit was exceeded by about 1.1 percent and inflation – by 9.1 percent. Estonia, which accumulated reserves from previous budget surpluses, has weathered the crisis better than Latvia and Lithuania. The main problem in the Baltic States was overheating and excessive increase in domestic demand. But they are very open economies, too, and therefore they had a real double whammy this time round. The article analyses the reasons why is it difficult for the Baltic States to reach the goal. Economic flexibility of the Baltic States and their constantly increasing integration with the euro area countries let us expect that the countries will successfully join the euro area. However, introduction of the euro is not a unilateral process. Member States have to meet the set criteria for the economic and legal convergence. |
