Lithuania manages to steer clear of IMF loans

  • 2009-10-15
  • From wire reports
VILNIUS - Although Prime Minister Andrius Kubilius is pleased at the increasing confidence in Lithuania, as evidenced on the international financial markets, he also notes that "The hard times must be dealt with, with the least amount of debts as possible," reports news agency ELTA. He says that "Confidence in Lithuania's financial system is gradually increasing in international markets, therefore, we will be able to borrow on these markets under more favorable conditions. We are gradually returning to the situation when Lithuania could borrow in the markets in 2006-2007."

On her visit to Finland on Oct. 7, President Dalia Grybauskaite said that Lithuania had successfully traded bonds priced at 1.5 billion U.S. dollars (1.02 billion euros), thus there would probably be no need to address the IMF for financial assistance. Prime Minister Kubilius said that he could neither deny nor confirm the news as any comments about such transactions before their completion were prohibited by international law. Yet he agreed with the president that Lithuania would most likely manage without the IMF assistance.

The head of the government emphasized that it was necessary to overcome the hard times with as little debt as possible, for future generations. According to Kubilius, in order for this to happen, the difference between income and expenses should be reduced no matter what painful decisions need to be taken.

"It is necessary to reduce the difference between the expenditures and revenues projected for next year, by even 4.5 billion litas (1.3 billion euros), to contain the budget deficit. It is a lot indeed," said Kubilius, repeating his metaphor saying that the economy slumped "to the sixth floor from the eighth, which means from the level of 2008 to the level of 2005-2006."

According to the prime minister, it is impossible to achieve such results by cutbacks in spending by ministries alone. It is planned to reduce the so-called ordinary expenditures, by around 50 percent, next year. Social expenditures are also to be cut, yet no agreement with social partners has been reached as the National Agreement has not yet been signed.

He says, concerning the National Agreement, these discussions show that the people find the government's actions important. "We should simply ask ourselves whether it would be better if there was no such National Agreement, if trade unions, businesses did not sit at the table of talks and did not search for solutions that are very important to Lithuania. In my opinion, we do the right thing by sitting together, talking and seeking agreement," said Kubilius.