BNS: Lithuania should be able to solve its problems without seeking help from IMF - Grybauskaite
Updated 2009-05-21
LONDON, May 21, BNS - EU budget commissioner Dalia Grybauskaite who won a landslide victory in Lithuania's presidential elections last Sunday believes that Lithuania should be able to solve its problems without seeking helpfrom the IMF, the Financial Times reports on Thursday.
"If Lithuania - with a 5 per cent budget deficit - can refinance i tsdebts, we don't need to apply," she says. "If external markets deteriorate and we cannot refinance our debts, then we will apply." President-elect believes Lithuania should maintain its currency board until it adopts the euro and that the government should set a target date for the changeover. To succeed, the government needs to keep the budget deficit under controlas tax revenues shrink but Ms Grybauskaite warns against further deep expenditure cuts - particularly in welfare payments." I am worried about future cuts," she says. "Before we decide on future cuts we must be very careful." A 5 per cent budget deficit is not dangerous for an economy falling by between 10 to 15 per cent", the Financial Times quoted Grybauskaite assaying. In her opinion, it is more important for the government to focus onlong-delayed structural reforms to boost the economy. She also urges the European Union's new member states to use the economic crisis to make essential reforms. Grybauskaite also believes that new member states should not be granted special treatment, such as softer criteria to adopt the euro or easier access to ECB liquidity, as this could blunt their incentive to reform."No, I don't want to relax the [euro] criteria," she said. "Already our politicians have been too relaxed . . . The criteria are a framework forresponsible behaviour." She added: "I don't think that someone else should pay for the irresponsible fiscal policy in the new member states."
