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Government‘s decisive steps viewed favourably by European Commission

Date

2009 11 05

Rating
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Yesterday, the European Commission published its autumn economic forecasts updating the outlook for the EU area aggregate and providing the assessment of measures taken by each separate member state to overcome the economic downturn. The Gross Domestic Product (GDP) – one of the main macroeconomic indicators – is projected by the European Commission to decline by 18.1% in our country this year, and 3.9% next year. Export of goods and services is estimated to come down by 20.6% this year; but next year it is expected to go up by 1.3%. In its conclusions, the European Commission commends the Lithuanian Government for the decisive steps taken to tame the recession.
The European Commission underlines that the strong policy put in place by the new Government back in 2008 with a view to ensuring the stability of public finances, was an appropriate response to a sharp decline in the national economy. The necessary fiscal consolidation measures were adopted in December to contain the deterioration in public finances and limit debt accumulation, thereby supporting the credibility of the currency board arrangement. Due to accumulated imbalances and constrained financing conditions, there was no space for fiscal stimulus. However, due to the vigorous application of alternative measures, including a more intensive absorption of the EU structural funds, the Government managed to encourage export and investment in 2009.
The paper also notes that the Government’s decision to cut on spending for public sector in particular by wage-reducing measures was right. The provisions of the National Accord also received favourable evaluation.