Kirkilas downplaying Fitch downgrading

  • 2007-12-05
  • By Mike Collier

VILNIUS 's Lithuanian Prime Minister Gediminas Kirkilas is remainingsanguine in the face of a credit agency's decision to downgrade its rating ofhis country's economic prospects.

"The fact that the credit rating agency Fitch has changedthe outlook on Lithuania's rating from stable to negative is not pleasant to us, but we'llmake no tragedy out of it either," said Kirkilas.

According to the Prime Minister, a deeper analysis showsthat Lithuania's current macroeconomic situation is sustainable. Althoughincreased inflation and a large current account deficit are a cause forconcern, there is no major risk of overheating, he maintains.

In the Prime Ministers' view, the Fitch assessment is basedon "a somewhat superficial attitude towards the Lithuanian economy" whichconcentrates on only two indicators -- inflation and the current accountdeficit.

"The Baltic States have been rapidly catching up with the other EU Member States; theyreceive substantial amounts from the EU support funds every year. TodayLithuania's GDP is growing s three times faster against the EU average, and wemay wish the convergence of living standards was also faster, but any serioushopes of that would be unrealistic," a statement from Kirkilas' office said.

Kirkilas also pointed towards its successful recentEurobond issue as evidence of the underlying strength of the economy.

"Moreover, as we can see the first signs of a gradual andsmooth slowdown, which in time will lead to a decline of inflation, it iscrucial to ensure that the measures taken would not slow growth too much andthe smooth slowdown, which is our target, would not turn into a slump", said Kirkilas.