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2012 11 19

Algirdas Butkevičius warns Lithuania may become backwater country without euro

Social Democratic leader Algirdas Butkevičius warns that Lithuania risks becoming "some backwater state" if it does not join the eurozone.
Algirdas Butkevičius
Algirdas Butkevičius / Irmanto Gelūno / BNS nuotr.

Butkevičius was speaking after a meeting with President Dalia Grybauskaitė, who said that she will propose him for prime minister.

The Social Democratic leader said that Lithuania should strive to join the single currency "as soon as possible", but added that inflation will prevent it from doing so until 2015, a year later than neighboring Latvia.

"Given all macro-indicators, fiscal policy indicators, 2015 is the most realistic year for Lithuania to join the euro. We know that Latvia will introduce (the euro) in 2014. So, if we (join the eurozone) much later, then we may become some backwater state," he told reporters.

Butkevičius promised that the new government will maintain fiscal policy discipline.

The Bank of Lithuania's economists said on Monday that Lithuania is unlikely to meet the so-called Maastricht criterion in 2012 and 2013 to qualify for eurozone membership in 2014.

"We will not meet the price stability criterion either in late 2012 or in late 2013," Rūta Rodzko, the director of the Bank of Lithuania's Economics and Financial Stability Service, said at a news conference. This means that the country will not be able to join the eurozone either in 2014 or in 2015, she said.

Lithuania's bid to join the euro in 2007 was rejected because its inflation exceeded the Maastricht limit. Estonia adopted the single currency in 2011.

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