Latvia to become eighth member of European bailout fund in March

The newest-eurozone-member Latvia will join the European Stability Mechanism (ESM) on March 13, becoming the 18th member of such European bailout fund. According to a statement issued on Monday by ESM, Latvia may request financial assistance if they experience problems with market financing, if such assistance is necessary to safeguard the financial stability of the eurozone as a whole and of its Member States, Xinhua reported. As an ESM 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, including 221.2 million euros in paid-in capital. The payment of paid-in capital will be made in five annual installments of 44.24 million euros each. In July 2013 Latvia was formally approved for accession to the eurozone from 1 January 2014.