Lithuania should take measures to bolster investor confidence and stop moaning

February 3, 2009 at 10:42 pm Leave a comment

Since the Conservatives won the biggest amount of votes out of the all political parties in the Parliamentary elections and formed a majority coalition Government there was a lot of talk about how the Government’s public communication skills.  Once Mr. Kubilius assumed the he Prime Minister’s post he began to spread message that the situation in finances are much more difficult than it was assumed.

The Social Democrats, on the other hand, having ruled Lithuania for almost eight years still maintaining that this is not a big crisis but only some ‘signs of recession in Lithuania’ are visible.  It is faire to say that all that time their ruled in the various coalitions, and the previous Government was a minority Government.

Lithuania’s Baltic neighbours are already technically in a recession and it is possible to see what the economical situation in Lithuanian will be in about a half year.  Only now Lithuanian’s are starting to feel a pinch of the crisis:unemployment began to rise, the wages stopped growing, banks almost stopped lending.  The Conservative led Government assumed that a real situation should be revealed, so they can justify their Belt Tightening Crisis Management Plan.  I suppose the Government overdone it, by not communicating to the public properly.

However, Lithuanian Member of the European Parliament (EP) Margarita Starkeviciute believes that Lithuania must take measures to bolster investor confidence and finish frightening the public.

“In my opinion, statements that the situation in Lithuania is very bad, that we are standing on the verge of bankruptcy, are absolutely irresponsible and have truly negative consequences,” she said during a news conference on Feb 2 in Vilnius.

As the BNS noted, some representatives of foreign banks had recently warned that the investors were willing to pull out of Lithuania due to negative information about the country, MEP said. Small countries were now considered unsafe thus the investments were being shifted to larger markets, she added.

“Measures should be taken to bolster trust in the economy and there should be no changes – either in the economic policy or the tax system”, Starkeviciute pointed out.

Capital movement across Europe might also contribute to the withdrawal of investors who could no longer be sure as to what business climate they could expect in a half a year.  The authorities could provide loan guarantees to companies, which could borrow both domestically and abroad in order to encourage economic recovery, Starkeviciute said.

“We could borrow from foreign banks – in Germany, France – under better terms,” she noted.

Lithuania should not fear that the borrowing costs would increase as a result of larger budget gap, MEP said adding that the borrowing terms for Estonia were similar even though the country had no budget deficit BNS writes.

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

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