Bank, government weigh future of litas

VILNIUS - The central bank chief has acknowledged that the Bank of
Lithuania and the country's government have different opinions about
repegging the litas to a euro/dollar basket.

"I think that we have to work on bringing those positions as close to
one another as possible so that a political decision on this issue
could be adopted," said Reinoldijus Sarkinas, board chairman of the
Bank of Lithuania.

Sarkinas stressed that the central bank's position "remains unchanged
and it is clear enough," without giving any further explanation.

The Lithuanian national currency, the litas, is now pegged to the
U.S. dollar at a rate of four to one under a currency board system.

The central bank chief has said earlier that legal amendments,
necessary to abandon the current peg in favor of a euro/dollar
basket, should be made this year so that the actual repegging could
take place in the first half of 2000.

Prime Minister Rolandas Paksas, however, has said that it would be
too early to make any decisions on the litas reorientation this year.

Sarkinas acknowledged Sept. 14 that the switch to a euro/dollar
basket, as an interim measure before the pegging of the litas to the
euro, would be beneficial to exporters.

The central bank chief reiterated that no devaluation or revaluation
of the litas should occur during the repegging process.

A definite date for the start of the process will be set as soon as a
political consensus is reached, he said.

The litas is stable and there are all preconditions to keep it stable
in the future, provided that there are well coordinated macroeconomic
and monetary policies, Sarkinas added.

The litas is now backed with gold and foreign currency reserves by
139 percent, he said.