Latvia hopes euro zone to sort out crisis

VILNIUS: Latvia, whose economy contracted by 18 per cent last year, has overcome the impact of Greece's debt crisis and is on track for complying with the terms of its 7.5 billion euro bailout, the prime minister said on Wednesday.

"We have not felt an immediate effect from the Greek crisis," Valdis Dombrovskis said in an interview. He said borrowing on international markets had become tougher, but added: "Latvia has enough funds from the international rescue package."

He saw no problems with the bailout, agreed at the end of 2008 with the International Monetary Fund and the European Union. "Now our budgetary position is better than Greece," Dombrovskis said. "We are on track towards implementing our commitments (to lenders)," he said.

Speaking later at the Baltic Sea States summit, Dombrovskis said the situation in the euro zone was a concern, given the Baltic states' goal to adopt the euro in the future. "The current events in the euro zone are cause for concern...The Baltic states have their currencies pegged to the euro and see their exit strategy in euro adoption. I hope this euro crisis will be resolved," he told the summit.

Dombrovskis also said a control mechanism was needed within the euro zone "to ensure that euro zone countries are following their own rules, which was a problem as we saw it previously".