Latvia’s approach to euro adoption

Practical guidelines for simple and convenient euro implementation

Preparing for euro implementation in Latvia, it was important for all parties involved in the process – the public and private sectors and society – to work effectively and cooperate. To ensure this, the Ministry of Finance, together with public and private sector partners, developed a series of euro implementation guidelines. Answers to the most significant questions are found in the guidelines for all main fields affected by euro implementation. The guidelines help ensure that the currency conversion in Latvia is as convenient, simple, safe as possible, and without unnecessary costs.

The practical guidelines offer businesses information on accounting records, tax payments, cost projection, exchange rate application and other issues. Government and municipal institutions are explained the necessary adjustments in their legal acts and routines, statistical data conversion and other relevant tasks.

The guideline development involved public administration experts, social partners, employers, local government representatives, industry associations, as well as several individual experts.

Balanced consumer rights, business interests and state requirements

Each country chooses its own approach to the legal framework of euro implementation. Latvia chose put into law only the most essential requirements for a successful euro changeover. They are found in the Law "On the Introduction of the Euro". Detailed recommendations are included in the many practical guidelines. With the development of these guidelines a best practice example for euro implementation in Europe has been created, because the chosen approach minimises bureaucracy and makes euro implementation more comprehensible.

Concerning the price display, according to the guidelines merchants are free to choose the visual design of price sign. The price signs do not have a specific standard, e.g., the size of the lat or euro signs and other details are not strictly regulated. Also, in advertising materials which are not meant for making a purchase, it is not necessary to indicate parallel prices in lats and euro.

The guidelines do not provide strict requirements of cash register receipt formats, only the information that must be displayed mandatorily, leaving the rest up to the merchants. Respecting opinion of merchant associations, older types of cash registers that cannot be reprogrammed to euro may stay in circulation. When necessary, such as a demand from a client, the cashier will make a hand-written note on the receipt, confirming it with a signature.

Accounting records guidelines help accountants to more easily navigate the requirements for the euro implementation transition period. They contain information on what to do with the annual report and supporting documents, including on previous periods, as well as creditor documents, average wage calculation and other aspects of accounting records. Essentially, just as with receipts, only the aims to be achieved are stated, leaving implementation to reach them up to individual businesses.

Exchange rate adaptation guidelines provide information on calculation of foreign exchange rates as of 1 January 2014 and where those will be available. Separate tax payment guidelines provide information on what to do in case of overpayment or other tax payment mistakes.

For euro implementation to be convenient and simple for local governments, guidelines foresee the confirming local government regulations en masse with one city council resolution. Certain requirements have also been defined for the development of local government budgets and public financial reports, real estate property and personal income tax calculations, as well as IT system accommodation timetables and other local government tasks.

For public administration bodies, the guidelines serve as a guide and offer concrete examples on how to prepare legislative amendments, significantly simplifying requirements for initial impact assessments.

To adopt the euro, laws and regulatory acts of the Cabinet of Ministers needed to be adjusted, replacing lats with the euro. From more than 5000 existing laws and regulations in the country, amendments were necessary in around 100 laws and 500 regulatory acts of the Cabinet of Ministers. Almost all necessary law amendments were handed in as a unified package and approved together in the Parliament. In newly passed laws the euro is already the unit of currency and also the 2014 national budget was passed in euro.

One-time reasonable expenditure, significant long-term benefits

To ensure a smoother euro implementation of businesses, in the middle of the year they were recommended to designate a euro transition coordinator and confirm a plan of action for euro implementation, foreseeing IT system and cash register adaptation and necessary resources.

Even though euro implementation requires of businesses certain one-time investments, calculations show that already in the first year of euro implementation these investments will pay off and, in the longer term the pay-off will significantly outweigh them. For example, one bank transfer from lats to euro currently costs business people an average of five lats (7.11 EUR), but after joining the euro area, those will be around 25 santims (0.36 EUR).

Information available to everyone

To ensure convenient, simple and safe transition to the euro, coordinated and effective communication on the transition process is essential. Informative activities in the first half of 2013 were directed towards professional target audiences. During the second half of the year and beginning of 2014 the main emphasis is and will be on informing the general society about the practical aspects of euro adoption.

To inform the society, a wide series of informative activities are being carried out. Among many others, there are informative materials, explanatory clips in the media, free informative events and seminars, a toll free information number 8000 3000, a website www.eiro.lv and a Ministry of Finance Euro Bureau information e-mail address [email protected] e-mail are in operation.  The variety of resources and channels is a conscious choice to reach the various social groups wherever they are in the most convenient format for them.

List of developed euro guidelines

• Practical euro implementation guidelines for business people and local government institutions.
• Guidelines for fixing and applying the exchange rate after the euro implementation day.
• Euro postage stamp implementation guidelines.
• Local government guidelines for the transitional period from lats to euro.
• Guidelines on tax payment issues during the transition from lats to euro.
• Guidelines on working with cash registers and payment systems for the dual price display and parallel lat and euro circulation period.
• Guidelines for accounting records during the transition period from lats to euro.
• Gift card, petrol station single purpose payment card and other single purpose payment instrument euro implementation guidelines.
• Guidelines for the product and service price indication order during the dual price display period.