EU Commissioner warns of inflation, slow EU fund implementation

  • 2006-09-27
  • Staff and wire reports
VILNIUS - On her recent visit to Vilnius, the EU budget commissioner lambasted the government's inaction on curbing rising consumer prices and the slow implmentation of EU funds. "Such a rise in inflation poses a threat to the growth of Lithuania's economy. It must be controlled, otherwise it would turn into a direct machine for the impoverishment of the population," EU budget commissioner Dalia Grybauskaite warned in an interview with news radio Ziniu Radijas.

"Consumer prices increased by 0.2 to 0.3 percentage points per month during the last three months, which proves that authorities took no measures as if inflationary processes were only 'observed from outside,'" she noted.
"Prime Minister Gediminas Kirkilas is well aware of threats posed by such growth in consumer prices," Grybauskaite said."Kirkilas should consider all and any options and hold talks on the subject with European Commissioner for Economic and Monetary Affairs Joaquiln Almunia, who is due to arrive in Vilnius this October."

The prime minister has said repeatedly that the government would have to pass unpopular measures to tame inflation.
Foot dragging on EU funds:
The EU has faced major problems distributing its funds to new member state projects. In fact, all 10 new members have used a mere 25 percent of available funds. The EU budget commissioner has also urged Lithuania to cut the red tape in the disbursement process.

"We have conducted a study into the utilization of resources available from EU Structural Funds and the Cohesion Fund [by new EU countries] covering from the accession date [May 1, 2004] until Sept. 15," Grybauskaite said. "The results are rather disappointing, since all 10 countries have managed to use only 25 percent of their allotted amount, and Lithuania's rate is 25.6 percent."

The commissioner added that, in terms of EU support utilization, Lithuania had moved from first place to fifth.
"It is not a big problem, since funds for projects that have already been approved may be assigned by the end of 2008. It is just a friendly warning, and you have to check why the process is going forward so slowly," Grybauskaite said.
The figures in question are quite large. Lithuania is scheduled to receive 1.263 billion euros from the EU in 2007, plus 813 million euros in structural support with 297 million for agriculture, 140 million for interior policy, and 14 million euros for administration.

"Now you have to analyze how to alleviate bureaucratic procedures. This is especially important considering that the amounts assigned to Lithuania are getting larger each year. In 2005 the amount was 1.7 billion more than in 2004. In 2007 the rise will also be significant," Grybauskaite noted.
The EU's 2007 budget expenditures in Lithuania will equal 6 percent of the country's gross national income (GNI), up from 3.3 percent in 2005 and 2.8 percent in 2004.