Lithuania should apply to IMF for loan without delay, GDP may plunge up to 15% – analyst

March 24, 2009 at 10:48 pm Leave a comment

Lithuania should apply to the International Monetary Fund (IMF) for a loan as soon as possible, Gitanas Nauseda, an adviser to president of SEB bank, the largest Lithuania’s commercial bank, believes, the BNS writes.

“I think that the sooner we apply to the IMF the better it would be for us. I think that the guarantees from the IMF and ability to secure a credit line, which we could use by 100% or 50%, or 20%, this fact alone could have positive effects on our abilities and possibilities to borrow on the private market as well,” Nauseda told the reporters on March 24.

As the BNS writes, in his view, it would be useful if the government applied to the IMF before taking an expected decision on the cutting of public expenditures by 3 billion litas (EUR 869 mln) in April.

According to the latest forecasts by SEB Bank, Lithuania’s gross domestic product (GDP) might decline by some 9% this year. However, the plunge might be sharper and reach up to 15 %, Nauseda warned.

“We have to get ready for a 15% economic decline as well. Unfortunately, such is the reality. It is manifested by industry performance, potential changes in other sectors, in particular the construction and real estate, which will get much more pronounced in 2009 <…> Finally, the situation in other sectors is not too optimistic, either,” Nauseda said, and the BNS writes.

In his opinion, if the previous government remained in power and continued its work unchanged, Lithuania would already have to declare insolvency.

“True, that would be bankruptcy. In this case it would not be that important whether we default on obligations to creditors and financial institutions or public servants and pensioners,” Nauseda said.

Source BNS

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

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