Government: Lithuania does not need to borrow from IMF

The Baltic Course
Danuta Pavilenene
January 9, 2009

After the International Monetary Fund (IMF) stated to the media that Lithuania might become the next country in Eastern Europe in need of international financial assistance due to the global economic crisis, the Lithuanian Government highlighted that Lithuania had no need to borrow from the IMF or similar institutions.

“Lithuania ensures the needed fiscal stability of the state by implementing the Government”s programme and the anti-crisis plan,” the Government stated in its press release published on Thursday.

After the visit of the International Monetary Fund Mission in Lithuania, the heads of the fund concluded that Lithuania was in no urgent need of taking a loan. It was indicated that the Lithuanian government institutions had taken determinate and appropriate prevention measures to maintain necessary stability, writes ELTA.

According to Christoph Rosenberg, head of the IMF mission in Central Europe, the situation of Lithuania is much worse than that of Estonia. “Estonia is the least vulnerable from the three Baltic states, because it has the most significant preventive measures: the country had a surplus budget for several years in a row, thus, now it has more funds,” Rosenberg stated.

The IMF forecasts that the gross domestic product (GDP) of Lithuania will decline this year by “at least” 2%. In October, the Bank of Lithuania predicted that the GDP would drop by 1.2% in 2009.

The IMF also forecasts recession in Lithuania for the upcoming year, since a decrease in demand in domestic market would be observed and banks would impose stricter conditions for taking a loan. In such a way, the country will join its Baltic neighbors – Latvia and Estonia, which have already recorded recession.