Lithuania ready for 2015 euro adoption, says EU

AFP , Wednesday 4 Jun 2014

Olli Rehn
European Commissioner for the Economy Olli Rehn answers questions from journalists during a media conference at EU headquarters in Brussels Monday, June 2, 2014 (Photo: AP)

Lithuania passed a key hurdle to adopting the euro on Wednesday, winning the backing of the European Commission to become the 19th state to use the single currency from next year.

The European Union's executive praised the Baltic state's "long-standing support for prudent fiscal policies and economic reforms."

"The Commission is therefore proposing that the EU Council of Ministers decide that Lithuania can adopt the euro on 1 January 2015," it said in a statement.

EU Economics Affairs Commissioner Olli Rehn said he hoped the council would approve the recommendation next month.

Lithuania's adoption of the euro and deeper integration to the EU comes amid widespread apprehension over a resurgent neighbouring Russia and despite doubts over joining a currency rocked by years of crisis.

Speaking in Lithuania, Prime Minister Algirdas Butkevicius said that given the Ukraine crisis, joining the euro "acquires still greater importance".

He said: "It is one more step towards deeper economic, financial and political national security."

Lithuania tried to join the now 18-member euro area in 2006-07 but was blown off track by the global financial crisis.

Since that attempt, Lithuania has made great efforts to put its public finances in order and meet the bloc's strict criteria for entering the eurozone.

"Lithuania's readiness to adopt the euro reflects its long-standing support for prudent fiscal policies and economic reforms," Rehn said in a statement.

"That reform momentum, driven in part by Lithuania's EU accession ten years ago, has led to a striking increase in Lithuanians' prosperity," he added.

The small country of some three million people is expected to see its economy grow 3.4 percent this year and 4.3 percent in 2015, putting it among the fastest growing EU economies.

Better still, it has strong finances, with a budget deficit well below the EU limit of 3.0 percent of Gross Domestic Product and total debt below the 60 percent ceiling.

Expectations that Lithuania will drop the lita local currency next year are already apparent in Vilnius.

Many businesses already post prices in the euro equivalent, a measure that will be obligatory starting in August if the ascension timetable is maintained.

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