VILNIUS - The European Commission's monetary chief, Joaquin Almunia, told a meeting of EU finance ministers last week in Vienna that no leniency would be extended to Lithuania when determining whether the Baltic state can join the eurozone in January 2007. Almunia stressed that candidate-countries would not only have to keep inflation below the required levels but be able to do so "for a long time." He said no concessions would be offered to Lithuania in order not to set a bad precedent.
Responding on Lithuanian radio, Finance Minister Zigmantas Balcytis said he would ask Almunia to specify what a "long time" is, adding that if Lithuania were subjected to strict rules the country would have no choice but to request the same rigidity in regards to other countries preparing to join the eurozone.
Despite having the lowest inflation in the Baltics, Lithuania is seeing price-growth just beyond the threshold required by Maastricht criteria, which regulate the eurozone. The country wants to be the first Baltic state, and among the first wave of new EU member states, to adopt the euro on Jan. 1, 2007.
Estonia has essentially admitted it would not pass the test for euro membership next year, while Latvia, which has the highest inflation in the European Union (see story this page), may not see the common currency until 2009, if not later.
In an interview with Lietuvos Rytas, Balcytis said he expects Lithuania's inflation would meet euro targets, adding that he is unhappy with the way the European Commission assesses the applicants' preparedness. "Initially, they told us that they would be very strict in assessing our compliance with all the criteria. Now they begin to speak about laying down additional conditions," he said.
As the minister explained, "In mid-April, the Maastricht reference value for March inflation will be announced, and Lithuania's compliance with it will be assessed. Then we will wait for the European Commission and the European Central Bank to make their decisions. I believe that Lithuania's (inflation) rate will meet those targets."
Balcytis said Lithuania would ask for an explanation as to for what period the sustainability of inflation criterion is applied. "Member states are required to keep their inflation rates stable, but the length of this period is not defined. Is it a year, more than a year or less?"
At present it appears only Slovenia will adopt the euro next year. At last week's meeting in Vienna, Karl Heinz Grasser, finance minister of the current EU president Austria, pledged his support for Slovenia.
Balcytis, however, said, "Slovenia's inflation rate complied (with the eurozone target) before March, but earlier it had been much higher than Lithuania's."