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Lithuanian report
by Euro Reporter
2012-07-17 07:30:07
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Lithuania to hold referendum on construction of nuclear plant

Lithuanian lawmakers approved a proposal to hold a referendum on whether to build a new nuclear power plant, rebuffing calls from Prime Minister Andrius Kubilius to reject the initiative. Parliament voted 62-39, with 18 abstentions, to hold the plebiscite in October along with parliamentary elections, according to the vote-count on the parliament’s website.

The Baltic region is seeking to cut its dependence on energy imports from Russia by constructing a 1,300-megawatt reactor in Visaginas, 150 kilometers (93 miles) northeast of Vilnius, the Lithuanian capital. The Lithuanian government had planned to sign an agreement with Japan’s Hitachi Ltd. (6501) to proceed with engineering and preparation work. Lithuania plans to hold a preliminary stake of 38 percent in the Visaginas facility, which will cost as much as $6.5 billion, according to initial estimates. Estonia may own 22 percent, while Latvia and Hitachi will each hold 20 percent.


Decreasing Lithuanian budget deficit to allow for cheaper borrowing - analyst

During the first half Lithuania's budget has collected LTL 9.99 billion (EUR 2.89 billion) - 4.6 percent more year-on-year and 2.4 percent more than it was originally planned. Senior Economist of the Bank Swedbank Vaiva Seckute says that the decreasing deficit of the budget has reduced the cost of the State's borrowing which now is below pre-crisis levels. According to analysts, the second half of this year should follow the positive trend, but the growth will be slower and more serious challenges may arise due to the adverse developments in the export markets.

 "The higher than expected tax collection occurred because of the higher economic growth than the Ministry of Finance had forecasted and due to the decrease in the black economy," said Seckute. Swedbank economist predicts that in the second half of this year the revenue from personal income tax will increase in line with the decreasing unemployment and the rising minimum and average wages.
 Seckute says that the market is already reacting to the developments in public finances. In late June, Lithuanian 10-year bond interest rate fell to its lowest level this year.

"The successful collection of the state budget, the diminishing deficit, the increasing debt and the ratification of the fiscal discipline will continue to make positive impact on the cost of borrowing. On the other hand, both the budget revenue and the interest rates at which the State will be able to borrow will remain heavily dependent on the developments in the euro zone and the growth rates of the global economy", says Seckute.  Swedbank forecasts that the public debt will fall from 40 percent gross domestic product (GDP) this year to 39 percent GDP the next year, whereas the budget deficit accordingly from 3 percent to 2 percent.


Lithuanian president calls on parties to resist ‘empty promises’

Lithuanian President Dalia Grybauskaite called on political parties to resist making pre- election promises that they may struggle to keep as Europe’s debt crisis threatens the Baltic nation’s economy. The next government must keep the budget deficit within 3 percent of gross domestic product, Grybauskaite told a news conference today in the capital, Vilnius. Still, “careful and gradual” increases in public wages may be possible as GDP grows at the European Union’s second-fastest pace, she added.

“We’ll have an interesting yet complicated period that requires responsible actions from politicians and an awareness of events surrounding Lithuania,” Grybauskaite said. “We need people to be dubious over empty promises” in the election campaign “because there are neither possibilities nor the money for them.”  Lithuanians go to the polls Oct. 14 to elect a new parliament. The Homeland Union party of Prime Minister Andrius Kubilius, who pushed through austerity measures totalling 15 percent of GDP in 2009-2010, has 8.5 percent support and trails three opposition parties, according to a survey by Spinter Tyrimai.

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