Lithuanian Parliament backs savings freeze

VILNIUS (BNS) - The Lithuanian Parliament, on Nov. 25, approved a two-year suspension of the government's deposit compensation program for lost savings despite active opposition.

The conservative Homeland Union used their majority to push amendments to the Law on Deposit Compensation for the Population and the Law on State and Municipal Property Privatization through the parliament.

The amendments OK suspending the third round of savings compensation, set to begin in February 2000. About 150,000 people aged 60 and older belong to the group. No date has been set for the launch of the fourth round of compensation, which includes over 650,000 people, the largest group of depositors, whose chances of getting their savings back look even more remote now. Under the program, one person is entitled to compensation of up to 6,000 litas ($1,500) worth of rouble-denominated deposits lost in the early 1990s. The amendments were passed by the votes of the ruling Conservatives who had launched the savings compensation scheme several years ago.

The Lithuanian Democratic Labour Party (LDDP), Social Democrats and other opposition deputies, who objected to the freeze, had once been fierce opponents of the scheme. The Conservatives argued that the suspension is part of their crisis prevention program, the main "pillars" of which, they say, are the reliability of the Lithuanian national currency, the litas, and the stability of the financial market.

The two-year hold is expected to reduce the country's 2000 fiscal deficit from 9 percent to about 6.5 percent.

The International Monetary Fund recommended the measure.