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Latvia gains final approval to join eurozone

The European Union has officially approved Latvia as the 18th member of the eurozone, which uses the bloc's common currency. The Baltic country is set to adopt the euro on January 1, 2014.

European Union finance ministers from the 28-member bloc gave their final approval for Latvia to join the eurozone during a meeting in Brussels on Tuesday, making it the 18th member of the currency union and the second from the Baltics.

The EU's current presidency holder, Lithuania, announced the news via its Twitter account.

"ECOFIN has taken final decision approving Latvia's euro membership from 2014,” the posting on the micro-blogging web site said.

Latvian Prime Minister Valdis Dombrovskis (pictured above) confirmed the news shortly afterward. "Yes we are joining the euro as of January 1 next year," he said, adding that it was "good news not only for Latvia but also for Europe and the eurozone."

It was also announced that Latvia’s current currency, the lat, will be converted at a rate of 0.7028 lats per euro.

Before Tuesday's final approval, Latvian Finance Minister Andris Vilks said his country was "ahead of the cycle," adding that they were now focused on growth rather than austerity.

After its real-estate bubble burst amid the world financial crisis in 2008, Latvia faced massive economic problems leading to a 7.5-billion-euro ($9.7 billion) bailout by the EU and the International Monetary Fund (IMF).

Now, after following an austerity plan to recovery, the country boasts the EU's highest growth rate, which came in at more than five percent year-on-year in 2011 and 2012. Its deficit and debt levels are also among the lowest in the bloc.

However, only about a third of Latvia's two million inhabitants have expressed support for euro accession in recent polls, with many fearing that the euro will bring price hikes.

hc/pfd (AFP, AP, dpa)