According to the ministry, the document signed by EU leaders in March and ratified by Lithuania’s Seimas (parliament) in June, could be implemented through a constitutional law on economic stability and growth rules.
The EU fiscal compact has been created in response to the debt crisis in the euro zone. Twenty five member states that have signed the document have agreed to take measures to limit the structural deficit to 0.5 percent of gross domestic product (GDP) – a target that might be deviated from temporarily in exceptional circumstances.
The treaty, which has not been signed by the UK and the Czech Republic, also provides for sanctions for non-compliance with the balanced budget rule.
The Finance Ministry has proposed to establish a budget policy regulator to ensure the implementation of commitments assumed under the fiscal compact. The director of the new authority, who would remain in office for a tenure of five years but could not serve more than two terms in a row, would be appointed by the Seimas under a proposal from the President.
The fiscal compact will come into effect if ratified by 12 euro zone member states.
When ratifying the compact, Lithuania’s authorities said that it would send a message to the international markets that the country would continue to implement its austerity policies.
