2014-05-15
V. Vasiliauskas: the currently recorded indicators are convincing — Lithuania, with a margin, is in accordance to the euro area standards
Today, the economic indicators that will determine the decision of the European Union institutions regarding Lithuania’s preparedness to become a member of the euro area, became clear. The reports prepared by the European Central Bank (ECB) and the European Commission (EC) on the country’s economic and legal convergence will be based on data from 15 May.
“The final conclusion of whether to invite [Lithuania into the euro area] or not will be written by the EU institutions; however, in the Bank of Lithuania’s assessment, there are no more reasons left for a negative decision,” says Vitas Vasiliauskas, Chairman of the Board of the Bank of Lithuania. According to him, the recorded indicators and their forecasted development are in accordance, with a safe margin, to the forecasted convergence criteria. V. Vasiliauskas believes that “even if we do receive certain remarks, our current numbers should be able to convince the assessors that Lithuania has reached a sufficient convergence level and, even more importantly, that this process is consistent and sustainable.”
Lithuania’s most important economic indicators — compliance with convergence criteria (15 May 2014)
|
|
Lithuania’s indicator (%, unless otherwise specified) |
Forecasted convergence criterion |
|
Average annual inflation |
0.6 |
1.1–1.7 |
|
Long-term interest rates |
3.6 |
5.4–6.5 |
|
The general government deficit-to-GDP ratio |
2.2 |
3.0 |
|
Ratio of general government debt to GDP |
39.4 |
60.0 |
|
Exchange rate, litas for 1 euro |
3.4528 |
3.4528 ± 15 % |
According to data of 15 May, on the basis of which the ECB and EC’s convergence reports were prepared, the general government debt-to-GDP ratio in the assessment period was 39.4 per cent, i.e. significantly less than the maximum allowed size of 60 per cent. The general government deficit-to-GDP ratio amounts to 2.2 per cent of GDP, or 0.8 p.p. less than the allowed 3.0 per cent threshold. The long-term interest rate indicator in Lithuania is 3.6 per cent, while the criterion’s value — no less than 5.4 per cent. Having constantly decreased over two years, the average annual inflation measure in Lithuania in April was at 0.6 per cent. Right now the ECB is also assessing the inflation measures of which countries are exceptional and therefore shouldn’t be included in counting the price stability criteria; therefore its size is still unknown, but, regardless of which current assessment option will be selected, Lithuania will still be in compliance with this criterion. The price stability criterion is the annual inflation arithmetic average of three EU countries where prices are the most stable, and this average is increased by 1.5 p.p.
The ECB and EC plans to announce the reports on Lithuania’s economic and legal convergence in early June. Those reports will be the basis for the EC’s proposal to the Council of the European Union regarding the euro adoption in Lithuania. The EU Council’s final decision is expected at the end of July.