At Tuesday's press conference in Vilnius, President of the European Commission José Manuel Barroso lauded Lithuania's painful fiscal consolidation efforts. Photo by Nathan Greenhalgh/Baltic Reports

VILNIUS — President of the European Commission José Manuel Barroso underlined the importance of Lithuania’s fiscal program for the rest of Europe at a press conference Tuesday.

Lithuania’s harsh austerity measures, most of which came in a short period of time in 2009, were painful, but seen as necessary by most in the financial sector. The country was able to cut its budget deficit significantly, but the country’s gross domestic product dragged with it, accordingly by 15 percent year-on-year. Many have commented that if Lithuania had not taken the hard decisions up front, that Europe may have another debt crisis on its hands.

“If there was still the need to demonstrate how interconnected we are, we have the Greek case. Greece accounts for 2 percent of the GDP of the euro area and you have seen the ripple effects, not only in the euro area, but outside the euro area and in the global market,” Barroso told journalists in Vilnius after a meeting with Lithuanian Prime Minister Andrius Kubilius.

Barroso underlined that European economies not only affect other EU countries, but the entire world given the EU’s large presence in the world.

“Russia has around 40 percent of reserves in euros. The Chinese are following this issue very carefully, so of course Lithuania and the Baltic countries are relatively small … but if there is a problem in one country, it will affect others. As you know, your country [Lithuania] is very much connected with Scandinavian countries,” the EC president said.

Barroso said that Lithuania had done well under harsh conditions.

“I want to congratulate him [Kubilius] and the government, because I know you have been taking hard decisions … without fiscal consolidation, we will not achieve confidence and without confidence we will not achieve growth and employment – this is a prerequisite for growth,” he said.

Lithuania is credited by the EC as being an active member of the European Union.

“We have fiscal consolidation at the same time as greater degrees of coordination – not only in budget matters, but in structural reform needed for [the country to] remain competitive.”

Barroso also met with Lithuanian President Dalia Grybauskaitė.

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