A grim economical situation in the good hands

December 15, 2008 at 10:43 pm Leave a comment

The new Centre Right Government has approved a new Budget for 2009 today even though it is encountering even more grim statistics than it expected.  Almost eight years of the Centre Left ruling, with the Social Democrats being in charge of the Governments, has left Lithuanian economy in lets put it mildly, in a grun situation.

The new opposition leader MP Kirkilas, and the former Prime Minister still maintains that the new government is too pessimistic and that the economical situation is not as bad as the Conservatives portray it.

As the BNS reported the previous government of Kirkilas has left behind one billion LTL (EUR 297.4 mln) in debts plus over a million litas in overdue VAT refunds to businesses.

There are even delays in paying salaries and social benefits, as well as in paying for goods and services.

The new Finance Minister Semeta said to the BNS that the new administration will make every effort to ensure that debts to businesses are repaid as soon possible, but added that they will need the parliament’s help in passing certain legislative amendments that would allow the state to save more money, as proposed in the government’s program and its anti-crisis plan.

Social Security and Labour Minister Rimantas Jonas Dagys said, “Payments in the social sector are five days overdue.”

National Defence Minister Rasa Jukneviciene informed the parliament that she has inherited 150.4 million litas in debts from her predecessor.

Heath Minister Algis Caplikas said that the debt left by the former administration in the healthcare system amounts to 43 million litas writes the BNS.

The BNS also informs that the Lithuanian central government’s budget revenue for 11 months of this year fell 589.6 million litas (EUR 171 mln), or 3.2 percent, short of target.

Budget revenue for January through November came in at 17.818 billion litas, compared with the projected revenue of 18.408 billion litas BSN informed.

Revenue for November alone reached 1.394 billion litas, 15 million litas short of the 1.409-billion-litas estimates.

Overall budget revenue for the 11 months, including 3.248 billion litas in EU assistance money, amounted to 21.066 billion litas. Total revenue for November, including 149.3 million litas in EU aid, came to 1.543 billion litas.

Further more, few days ago the Ministry of Finance announced that they project a negative GDP 4,8 percent growth in 2009.

The newly elected Prime Minister Kubilius his duties began not in his office in Vilnius but in EU President’s Borroso office in Brussels.  The newly baked PM brought a message to Brussels that Lithuania has an anti-crises action plan.

After meeting with the EU Commissioner Joaquin responsible for Economic and Monetary Affairs, Joaquin Almunia on December 11 Kubilius said to BNS: “There is common understanding that we should consolidate the fiscal situation rather than ponder upon fiscal stimulation and promotion of consumption – the path chosen by some other nations of the EU. It would serve as a poison to us”.

After meeting with Almunia, the Lithuanian PM attended a session of Nordic and Baltic prime ministers, which, in his words, addressed regional cooperation in the face of the crisis.

“There is a perception that all countries in the region should take part in the efforts to resolve problems of the economic and financial crisis. Already there are reports that Sweden has pledged regional support to Latvia. I believe it is a serious signal to us all, although we do not need financial assistance yet, however, the ideological and solidarity support is very important,” Kubilius concluded to the BNS.

The latest news that the IMF has finished its routine work in Lithuania and tomorrow will talk in detail about it with the authorities.  According to the first reactions the IMF has positively evaluated the anti-crisis plan.  According to the Lithuanian authorities there was no talk about a possible loan from the IMF.  MP Glaveckas, who is also the Head of the Seimas’ Finance and Budget Committee, said that Lithuania is in talks with some Japanese and the Chinese financial institutions about a possibility of a loan.

Any talk of Litas’ devaluation is considered to be not serious and such an opinion is marginalised in the Lithuanian media.  The situation is grim, however the government is in good hands.  Tomorrow the government will present the new budget to the Parliament.  The plan is to adopt the new budget this year.


Entry filed under: Baltic States, Economics, Great Britain, Latvia, Lithuania, Northern Europe, Politics, Scandinavia, Sweden.

Respect to the German Times! Lithuania; the IMF verdict

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