Lithuania sticks to its guns on eurozone membership in 2007

  • 2006-05-03
  • Staff and wire reports
VILNIUS - Top government officials said Lithuania would seek approval for adopting the euro starting Jan. 1, 2007 at a European Union summit next month. Prime Minister Algirdas Brazauskas said the country's official request has been sent to European Commission President Jose Manuel Barroso and Jean Claude Trichet, president of the European Central Bank.

"We follow our line and are certain that we have achieved the financial level required in accordance with all criteria. We will make a statement, which will not be tough, it will be very diplomatic," Brazauskas said on April 26.
The government believes that the assessment of a country's readiness for the adoption of euro will be based on the principle of fair treatment of all members and comprehensive analysis. The authorities note that the assessment should consider Lithuania's macroeconomic stability in the environment of exceptionally fast economic development.
The government decided to send the letter after Eurostat, the EU statistical office, published inflation statistics showing that Lithuania misses the Maastricht inflation target by 0.1 percent. But Lithuania's finance minister said that, based on its calculation methodology, the country was meeting the inflation criterion.

European Commission officials have not yet commented on the letter.
"I expect a positive reaction 's that the situation and Lithuania's position, that we have a public debt of 18 percent [of GDP] and a fiscal deficit of 0.5 percent 's will be assessed objectively," Brazauskas said.
The government believes that the country should be allowed to adopt the euro on Jan. 1, 2007 since it complies with all requirements set out in the Maastricht Treaty. However, some commission officials have doubts whether the Baltic state meets the inflation criterion.
Finance Ministry estimates have put the Maastricht reference rate at 2.65 percent or, if rounded off, at 2.7 percent in March, the same as Lithuania's twelve-month inflation average.

"Indeed, the inflation rate is not big, especially considering the 7.5 percent growth of our GDP," Finance Minister Zigmantas Balcytis said on April 26, adding that a rejection on the basis of such a slight difference between the reference and actual inflation rate had no precedent in EU history.
The commission and ECB are to publish their official recommendations over Lithuania's compliance with the requirements of the Maastricht Treaty by May 16.
If the recommendations are favorable to Lithuania, the final decision would be made at the Council of European Union on June 15-16. Should the recommendations be negative, the summit might not include the issue into the agenda at all.