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Latvia to join European Stability Mechanism

Staff writer ▼ | March 4, 2014
The newest eurozone member, Latvia, will join the European Stability Mechanism (ESM) on March 13, becoming the 18th member of the bailout fund.
Latvia
LatviaThe newest eurozone member, Latvia, will join the European Stability Mechanism (ESM) on March 13, becoming the 18th member of the bailout fund.


According to a statement issued Monday by the ESM, Latvia may request financial assistance if they experience problems with market financing and if such assistance is deemed necessary to safeguard the financial stability of the eurozone.

As a member, Latvia is obliged to subscribe to ESM capital, which provides backing for the debt instruments issued by the ESM in order to finance loans and other forms of financial assistance.

Taking into account a temporary correction for new ESM members whose GDP per capital is less than 75 percent of the European Union average, Latvia's ESM capital contribution key was set at 0.2757 percent.

This implies a capital subscription of 1.93 billion euros (2.66 billion U.S. dollars), including 221.2 million euros in paid-in capital. The payment of paid-in capital will be made in five annual instalments of 44.24 million euros each.

In July 2013, Latvia was formally approved for accession to the eurozone from Jan. 1 2014.


 

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