Lithuania should join Euro by 2009/10 – the Lithuanian PM

August 27, 2007 at 4:49 pm 1 comment

Lithuanian Euro coinIn an interview to the Bloomberg The Lithuanian PM Kirkilas said that Lithuania should adopt Euro in 2009.  `The main point of our policies is that we will have a balanced budget in 2009 or the latest in 2010 and when that happens we will be ready to adopt the common currency.”

As Bloomberg reports the three Baltic states are under threat of an economic collapse because they their growth is among the fastest in the 27- nation EU.  Lithuania’s economic growth slowed to a preliminary 8 percent in the second quarter from 8.3 percent in the first quarter, but according to Kirkilas “I do not see that danger as economic growth will slow to 6.5 percent next year, then 6 percent in 2009 and around 5 percent in 2010.”  The main Lithuania’s obstacle to qualify for the Euro criteria was and remains a rising inflation.  It should be remembered that Lithuania missed the Euro criteria inflation target of  only by 0,1% in 2006.  Many in Vilnius saw the refusal to allow Lithuania to adopt Euro as a political decision.  However, the inflation is on the rise still.  At the moment the inflation is about 5,1% in July, highest since 1998.

The PM said to the Bloomberg that `We had a pickup in inflation because of taxation and higher prices for alcohol and tobacco,” Kirkilas said. “Energy prices have been the main driver of inflation and have increased on average between 25 and 30 percent from the start of the year.”The rising wages are also to blame for the rising inflation.  As the BNS reported an average monthly gross earnings rose by 20.2 percent in Lithuania in the second quarter of this year and the average net salary soared by 27.6 percent, year-on-year bases.

However, it needs to be noted that some of the Lithuanian business  commentators are convinced that it would be impossible to join Euro by then.

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Entry filed under: Baltic States, Economics, Estonia, EU, Latvia, Lithuania, Northern Europe, Politics. Tags: .

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