European Commission extends deficit deadline

VILNIUS — Entering the eurozone will be easier for Lithuania now that the European Commission said it would relax restrictions for the country and extend the deadline for keeping a small deficit.

The country’s budget deficit will be allowed to balloon out and will be assessed only in 2012, a new document leaked to Bloomberg said.

The relaxation is due to the economic crisis, which the country has little control over.

To gain the euro, Lithuania needs to present a budget deficit of less than 3 percent – part of the Maastricht criteria for gaining the common currency.

The Commission previously recommended in July that Lithuania only be given until 2011 for assessment, and expects Lithuania’s budget deficit to reach around 9.7 percent of gross domestic product in 2011, up from the estimated 9.2 percent for 2010.

Lithuania must “implement rigorously the corrective measures planned in the budget for 2010 and adopt additional measures if necessary,” to reach the limit by 2012, the commission said in the report, due to be released Thursday.

“To limit the risks,” the government should strengthen “fiscal governance and transparency,” and “expenditure discipline,” the report said.

The latest information from the finance minister Ingrida Šimonytė show that the deficit is around 9.5 percent, up from 3.2 percent  in 2008. The 9.5 percent estimate takes into account the government’s stern austerity measures, which are expected to cut 5 percent from the figure. This follows previous cuts of 8.5 percent of GDP to the last year’s deficit.

1 Response for “European Commission extends deficit deadline”

  1. LT guy says:

    A sightseer is necessary to evaluate what’s really going on i lithuania. Municipalities are all bancrupt or in hopeless debt, street lights are going off, business (because of draconic taxes) gone shadow. Delfi: 50 percent of tobacco is from “left”. Unemployment and emigration official figures are bad enough, but have to be examined, as some surveys imply much worse situation. Social security system “Sodra” is at 2.5bn LTL defficit in 2009, which means a bancruptcy of the system, trust of the government gone to below 10 percent acc to survey. Good luck looking at the official numbers. On the other hand, Greece was caught on faking the statistics, and that resulted only in words, no action.

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