Latvia Set to Be Euro’s Newest Member

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Latvia is set to join the euro, after the European Parliament voted in favor of its inclusion in the single currency zone.

The former communist country has met the European Union (EU)'s formal criteria to join the euro, and bounced back from a severe recession in 2009 which saw its economy contracted 18 percent.

"Latvia has made huge efforts to overcome the economic and financial crisis and I'm pleased to welcome it to the euro zone," said Burkhard Balz, a German member of the European Parliament (MEP), who presented a report to parliament recommending it be allowed to join.

MEPs praised the people of Latvia for their "extraordinary efforts to overcome the financial crisis", and passed Balz's recommendations by 613 votes to 67, with 29 abstentions.

Latvia will become the 18th member of the euro zone in January 2014, assuming EU finance ministers give a final green light when they meet next week.

The Baltic nation joined the EU in 2004 but had to fulfill certain criteria to become part of the euro zone, including price and exchange rate stability and "sound and sustainable" public finances.

Latvia bounced back from its 2009 recession to post growth of 5.6 percent in 2012, and reduced its fiscal deficit to 2.7 percent of gross domestic product. It received 7.5 billion euros ($9.7 billion) in aid from the EU and International Monetary Fund to help boost its economy, in return for promising to instigate strict austerity measures.

"Latvia is the example of how to successfully emerge from a deep crisis with stringent austerity measures," Balz told parliament.

However, other MEPs warned Latvia must maintain its pace of reform and strengthen its economic governance, according to a news release from the European Parliament. MEPs also said that Latvia needs to ensure its banks are under good supervision.

Earlier this week, Croatia, another formerly socialist country, was admitted to the European Union.