Compliance with Maastricht Criteria
The European Union (EU) Member States which have not joined the euro-area, yet, have to comply with severalconditions to adopt the single currency or the so-called Maastricht criteria. Criteria are the following:
- Inflation rate should be no more than 1.5 percentage points above the rate for the three EU countries with the lowest inflation over the previous year;
- Budget deficit must generally be below 3% of gross domestic product (GDP);
- National debt should not exceed 60% of GDP;
- Long terms rate should not be more than two percentage points above the rate in the three EU countries with the lowest inflation over the previous year;
- National currency's exchange rate should have stayed within +/-15% margins set within the Exchange Rate MechanismIIfluctuation for two years before joining the euro area.
The main objective of the Maastricht criteria is to ensure that only those EU Member States join the euro area whose economic conditions ensure price stability and effective functioning of the euro area.
The convergence criteria have to be met based on the current data, but at the same time compliance with the convergence criteria has a significant role not only at a particular moment but also in a longer period of time. Therefore, when evaluating a Member State, a special attention is paid to sustainability of convergence.
Compliance with Maastricht criteria - Latvia's data in April 2013
|
Convergence criteria |
Criteria in April 2013 |
Latvia's achievement in April 2013 |
|
Budget balance (% of GDP) |
-3,0 | -1,21 |
|
Government debt (% of GDP) |
60,0 | 40,71 |
|
Average inflation over last 12 months (%) |
2,7 | 1,32 |
|
Government securities long-term interest rate (%) |
5,513 | 3,844 |
|
Currency exchange (%) |
+/-15 |
+/-15 |
Information source:
1 Central Statistical Bureau of Latvia: http://www.csb.gov.lv/notikumi/visparejas-valdibas-budzeta-deficits-2012-gada-samazinajies-lidz-12-no-ikp-36441.html
2 Eurostat: http://appsso.eurostat.ec.europa.eu/nui/show.do?dataset=prc_hicp_mv12r&lang=en
3 Assuming the criteria include Sweden, Latvia and Ireland.
4 Eurostat: http://appsso.eurostat.ec.europa.eu/nui/show.do?dataset=irt_lt_mcby_m&lang=en
5 Bank of Latvia: http://www.bank.lv/monetara-politika/valutas-kursa-politika/valutas-kursi
More information at the Ministry of Finance and the Bank of Latvia websites.
Compliance with Maastricht criteria - Latvia's data
|
Criteria in2009 |
Latvia's achievement in 2009 |
Criteria in2010 |
Latvia's achievement in 2010 |
Criteria in2011 |
Latvia's achievement in 20101 |
|
|
Budget balance (% of GDP) |
-3,0 | -9,8 | -3,0 | -8,3 | -3,0 | -3,5 |
|
Government debt (% of GDP) |
60,0 | 36,7 | 60,0 | 44,7 | 60,0 | 42,6 |
|
Average inflation over last 12 months (%) |
2,4 | 3,3 | 2,4 | -1,2 | 3,1 | 4,2 |
|
Government securities long-term interest rate (%) |
5,20 | 12,36 | 5,20 | 10,34 | 7,30 | 5,91 |
|
Currency exchange |
Fixed currency exchange against the euro and 2 years participation in ERM II |
Fixed currency exchange against the euro since 2005, participation in ERM II since May, 2005 | Fixed currency exchange against the euro and 2 years participation in ERM II | Fixed currency exchange against the euro since 2005, participation in ERM II since May, 2005 |
Fixed currency exchange against the euro and 2 years participation in ERM II |
Fixed currency exchange against the euro since 2005, participation in ERM II since May, 2005 |
Data from previous periods available at Ministry of Finance.
Information source: State Treasury, Central Statistical Bureau of Latvia, Eurostat.
Economics ABC: Maastricht Criteria at infographics (available in Latvian) -
- inflation;
