The direct financial benefits of eurozone’s membership for population, businesses, and the state should top at least 0.5 billion litas (EUR 144.93 m), they project.
“First of all, eurozone entry would drive down Lithuania’s borrowing costs. Lithuania’s total foreign debt exceeded 85 billion litas at the end of last year. If the borrowing costs declined by at least a half percentage point, which is a rather conservative assumption, Lithuania’s companies, residents and, the government could save some 425 million litas in a year,” Nerijus Mačiulis, Swedbank’s chief economist, said in comments issued by the bank.
The government should get the largest direct benefit, he said adding that the government’s foreign debt totaled 31 billion litas and a 1 percentage point decline in borrowing costs would drive the annual debt servicing costs down by 300 million litas.
“The borrowing costs are mostly affected by the sustainability of public finances. However, Lithuania’s accession to the eurozone would improve confidence in the country,” the economist said.
According to Mačiulis, one more argument in favor of euro zone entry concerned the fact that Lithuania’s companies and residents exchanged tens of billions of litas into euros and vice versa each year, which cost them up to 100 million litas.
The economist also pointed out to indirect financial benefits related to the inflow of foreign direct investment, which, in his opinion, could be much larger. Foreign companies investing in the emerging markets were concerned with currency stability in those countries – currency devaluation would impair the value of assets acquired in those countries, hence the probability of devaluation would reduce the attractiveness of those markets, he explained.
