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For Lithuania, the doors to the euro area already open

June 4, 2014

Lithuania is in compliance with the Maastricht criteria and is prepared to join the euro area as of 1 January 2015 — these conclusions were presented by the European Commission and the European Central Bank in published announcements on the convergence.

The reports note that Lithuania, in implementing economic reform and responsible fiscal policy, has made great progress towards euro area membership.

The European Commissions’ convergence report to the European Parliament and the Council states that, at the end of April, average annual inflation in Lithuania was 0.6 per cent — a much lower indicator than the Maastricht criterion of 1.7 per cent.

General government deficit in 2013 was 2.1 per cent of GDP (the criterion being 3.0% of GDP), government debt — 39.4 per cent of GDP (the criterion being 60% of GDP).

The long-term interest rate was 3.6 per cent, while the convergence criterion — 6.2 per cent. National legislation has been harmonised with the Treaty, while the litas and euro exchange rate remains stable.

Olli Rehn, the Vice-President of the European Commission (EC) and Commissioner for Economic and Monetary Affairs, announced that the EC has submitted a proposal to the Council of the European Union on accepting Lithuania into the euro area.   

The Prime Minster Algirdas Butkevičius says “The mustered efforts and consistent work of all of us have been noticed and appreciated. The adoption of the euro is Lithuania's economically and politically considered strategic move in pursuit of stronger economic growth and a better life for all residents of the country at the same time. The euro adoption, given the circumstances beside Lithuanian borders, is gaining a still greater significance. It is one more step towards our country's greater economic, financial and political security.

“Symbolically, having marked the 10th anniversary of Lithuania's EU membership, we are very close to a new reference point, yet another historical moment in the development of the country — today, the European Commission opened the door to Lithuania to the euro area,” says the Minister of Finance Rimantas Šadžius. The Minister is convinced that euro area membership for Lithuania means still greater confidence of foreign partners in the state — which means more abundant investment, lower unemployment and the rising income of the people. “The European Commission's positive decision is only the beginning of the path. We must ensure that people await the euro and that its coming be a smooth process,” says R. Šadžius.

“The news today from Frankfurt and Brussels comes as no surprise — having responsibly done our homework and having monitored the compliance with convergence criteria, this is exactly the assessment that we had hoped for,” says Vitas Vasiliauskas, Chairman of the Board of the Bank of Lithuania. According to him, the conclusions of the EU institutions are a solid confirmation for Europe and the world that, having independently dealt with the crisis, Lithuania not only restored its economy, strengthened the banking sector, but also laid the foundation for sustainable development in the future. “We did half of the work flawlessly, but half of the work is only a good start,” says the Governor of the Bank of Lithuania, stressing that membership in the euro area and in the banking union as well would not provide a guarantee of prosperity, but only new opportunities. According to V. Vasiliauskas, in order to make these opportunities a reality, the necessary conditions will remain the same — financial prudence, transparency and discipline.

 On 19 June 2014 the issue of Lithuania joining the euro area will be discussed by euro area finance ministers (the Eurogroup), on 20 June — the Economic and Financial Affairs Council (Ecofin); on 26–27 June, a discussion is planned in the European Council; in mid-July, the European Parliament will announce its opinion following discussions.

The Council of the European Union intends to take the final decision on the acceptance of Lithuania into the euro area on 23 July. 

Lithuania will be the 19th EU Member State to have adopted the euro.