On Thursday, 8 March, the Saeima supported in the first reading the draft law whereby Latvia is to ratify amendments to Article 136 of the Treaty on the Functioning of the European Union (EU), or the so-called Lisbon Treaty. The amendments establish the European Stability Mechanism (ESM) for the purpose of ensuring financial stability of the euro area.

In the vote on the draft law On the Decision of the European Council, which Amends Article 136 of the Treaty on the Functioning of the European Union in Regard to a Stability Mechanism for Countries of the Euro Area, 78 members of parliament were in favour of its ratification, none were against and one member of parliament abstained.

Amendments to Article 136 of the Lisbon Treaty establishing the ESM are to take effect on 1 July this year. The amendments must be ratified by all EU member states before this date.

Latvia will have to join the ESM and contribute to it financially only upon joining the euro area, which is planned to happen in 2014. Latvia’s contribution to the ESM would be approximately LVL144.29 million over a five-year period.

The ESM will have a total subscribed capital of EUR 700 billion with its total effective lending capacity set at EUR 500 billion. The total capital will be divided into the paid-in capital of EUR 80 billion and the committed callable capital of EUR 620 billion.

Saeima Press Service