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Lithuanian report Lithuanian report
by Euro Reporter
2012-09-21 09:20:13
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Lithuania Predicts Inflation Rate Will Drop to 3% in September

Lithuanian inflation under European Union methodology will probably slow to 3 percent from a year earlier in September, the statistics office said.  Consumer prices may rise 0.4 percent from the previous month, the fastest pace since May, as growth in clothing and fuel costs accelerates, the office, based in the capital, Vilnius, said today in an e-mailed statement. Inflation was 3.4 percent in August, it said, increasing a 3.3 percent estimate released Sept. 10.

Lithuania needs to slow inflation to qualify for planned euro adoption in 2014. Countries seeking to make the currency change must keep inflation at less than 1.5 percentage points above the average of the three lowest levels in the EU. That target was 3 percent in August, while Lithuania’s 12-month average was 3.5 percent.

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Election will not threaten Lithuania's austerity plans

Lithuania's austerity policies, touted as an example for Europe of how economic shocks can revive growth, will stay put whatever the outcome of an election between a centre-right government and centre-left opposition, the prime minister said on Monday. Lithuania holds a parliamentary election in October. It is the biggest electoral test for Prime Minister Andrius Kubilius since he introduced one of Europe's harshest austerity programs, leading to a collapse in GDP of about 15 percent in 2009. The Baltic state has since recovered to be one of Europe's fastest growing economies, expanding about 6 percent last year while remaining pegged to the euro. It is heralded as an example of what countries such as Greece could achieve with "internal devaluation" - cutting wages and increasing productivity rather than allowing currencies to fall.

While Kubilius is unpopular in polls, in part due to what is perceived as voter fatigue with spending cuts and tax increases, the prime minister dismissed fears an opposition win would lead to more populism. "Consensus is still here," Kubilius told Reuters. "I see the statements of different political parties, very strong statements, on the basic fiscal discipline as a prerequisite of future activities." After a path of tax increases and spending cuts to keep the budget deficit in check, Kubilius's government lags all three main opposition parties in opinion polls. "Of course we see some kind of mismatch of what some parties are declaring about their proposals," Kubilius said. "But I think that usually reality after elections brings very quick understanding that there is no way for some kind of rather populist ideas to be implemented."

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Lithuanian industrialists call for reducing administrative burden on business

The Lithuanian Industrialists Confederation (LPK) is urging political parties to reduce administrative burden on businesses, recommends changing the operating principle of business regulatory authorities by placing the consultative nature of their activities as priority.

The industrialists also think that the economic growth through increasing the country's competitiveness must be the key priority for the state policy, while the public sector must settle with business timely and properly, writes LETA/ELTA. "It is mandatory to improve the public procurement system, speed up digitalization of public services by giving the priority to health care and social security systems and services provided by local governments," said Robertas Dargis, president of the LPK.

In his view, it is important to always seek to comply with the Maastricht criteria, while tax laws should not be amended more often than in neighbouring countries.



   
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