Lithuania will formally ask the European Commission to assess its readiness to join the Eurozone in January 2015 by spring 2014, Finance Minister Rimintas Sadzius said on July 18.
With Estonia having joined the single currency in 2011, and Latvia earlier this month securing final approval to sign up from next year, Lithuania will complete the Baltic set in adopting the euro just five years after the region's economies nosedived, assuming its bid succeeds.
Sadzius said the procedure would be similar to that followed by Latvia, which submitted its application in March, reports the Wall Street Journal. While many critics claim the Baltic countries are crazy to join the beleaguered club, Prime Minister Algirdas Butkevicius has echoed his Latvian counterpart in insisting that the move will help lower the country's borrowing costs and increase foreign investment thanks to lower currency risks.
Latvia has already seen its sovereign ratings upgraded by all three major agencies in the last few weeks as it pushed through its application. Meanwhile, Riga points out that with the lat tied to the euro anyway, there is little advantage to remaining outside the currency. Lithuania's litas is also pegged to the euro.
However, Vilnius' intention to join the Eurozone came into question late last year when the europhile centre-right government of Andrius Kubilis was replaced by a left-leaning coalition. While Butkevicius moved the previously professed target date for joining back by 12 months, he also insisted the plan to adopt the single currency remained. The comments of Sadzius confirm that intention.
Speaking the previous day following a meeting with the director of the International Monetary Fund (IMF) Cristine Lagarde, the minister claimed Vilnius must push to hit the 2015 target because failure would risk unnerving foreign investors, making them sceptical about government indecision, reports Leta. He also said that remaining the only one of the Baltic trio outside the single currency would be damaging.
"The development of the country depends on investments in Lithuania. If we stop now, we start to doubt and reconsider, we will lose the trust of investors," Sadzius said. "After Latvia joins the euro area next year, the eyes of the whole world will be on Lithuania. Therefore, our aim is not to become excluded from the Baltic region and to introduce the euro in 2015."
However, similar to next-door Latvia, Vilnius is likely to have its work cut out to persuade the population of the wisdom of the move. "The euro is not the main aim that we have to strive after," the minister added in a clear effort to head off those concerns. "The main aim is healthy economy in the country that would deliver value for the residents of Lithuania."
Vilnius will also need to satisfy the Eurozone's strict fiscal criteria before getting the go ahead. Jorg Asmussen of the board of the European Central Bank warned on July 17 that Lithuania specifically needs to pay attention to its deficit and inflation. Noting the country is demonstrating impressive economic growth, he stressed nonetheless that the key priority is to maintain expansion at a sustainable pace.
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