News

VILNIUS, Nov 26, BNS - The European Commission proposes to mobilize up to 5 billion euros for trans-European energy interconnections as part of its 200-billion-euro European Economic Recovery Plan made public on Wednesday. Most of the proposed 5 billion euros would go to the Baltic region, including Lithuania. "This is very good news to Lithuania. We propose a rather bold step, that is, to renegotiate the financial perspective. We recommend that countries earmark significant resources for energy interconnections, and this has a direct effect on the interests of Lithuania. We propose to do this as soon as possible. We propose a package of up to 5 billion euros," EU Budget Commissioner Dalia Grybauskaite told BNS.

However, Lithuania will have to work hard to be able to participate in the recovery plan and be eligible for an additional aid.

"Lithuania, in the near-term, should stabilize its state and public finances. This is task number one. Task number two is to shore up the economy through structural reforms and highly targeted investment in energy saving programs, innovation and the education reform, etc. Such a fiscal stimulus would be justified," the commissioner said.

Grybauskaite said that the proposed 200 billion euros would represent 1.5 percent of the EU's gross domestic product. Around 170 billion euros, or 1.2 percent of GDP, should come from member states and the remaining 30 billion euros, or 0.3 percent of GDP, from the EU's budget and from the European Investment Bank.

"I want to underline that these are only economic and fiscal policy coordination recommendations. Each country will have to choose those measures that are the most appropriate for it. All of them, and fiscal stimulus [measures] in particular, must be short-lived, highly targeted and compliant with the European Stability Pact," she said.

However, Lithuania now is among those countries that are incapable of providing such fiscal stimuli because their economic and fiscal situation is very poor and they do not have room for maneuver, Grybauskaite said.

"Lithuania is regarded as being among those countries, at least for now. No other European country is in a situation like this, with inflation higher than 10 percent and a likely deficit of 5 to 6 percent, as projected in the outgoing government's 2009 budget," she said.

The commissioner added that, nevertheless, Lithuania would indirectly benefit from the whole plan because it should help Europe at least in stemming the economic downturn. "Lithuania's economic situation in the future will also depend on how other states will feel and how they will behave, and on their ability to save their economies," she said.

The European Commission expects to submit the recovery plan to the EU's leaders during their summit in Brussels on Dec. 11 to 12.