Analytics, Economics, EU – Baltic States, GDP, Lithuania

The IMF assessed positively that Lithuania reduced the budget deficit, however, warns that economy growth is at risk due to external factors, especially – the euro zone crisis. It may influence Lithuania's borrowing cost, writes LETA/ELTA.

The IMF said that the government has to be focused on fiscal consolidation, strengthening of the banking system and other structural reforms that could encourage growth and ensure creation of new long-term jobs.

The IMF forecasts the growth of Lithuanian GDP to go down to 2.75%. It will be influenced by decrease in export, concerns about the world's and Europe's future. This year inflation should stand at 3%; reaching 3% budget deficit of GDP is possible.

As usually, The IMF proposes to tax on real estate and transport vehicles.

Representative of the IMF Missions in Lithuania Julie Korack, after her meeting with Prime Minister Andrius Kubilius, said that even in the case of the worst scenario, Lithuanian economy will grow despite noticeably lower growth in Europe. Korack praised Lithuania's progress after the crisis of 2008.

"Implementation of tough government's policy measures influenced the progress. We see that the growth has returned and a recovery is taking place. On the other hand, the growth will be lower this year due external factors and emerging risks. Many challenges for the country to face, including high unemployment rate, do remain," Korack said.

When asked if the state's economic recovery would be possible if the worst euro zone scenario came true, Kozack said that Lithuania could be harmed by what is happening in Europe, however, if the euro zone collapsed, Lithuania's growth would still continue, although, it would be slower in Europe.

"We have appreciated the government's cooperation with the IMF but at the same time I would like to stress that we are glad that Lithuania is a proof that we can manage and overcome the toughest crisis ourselves without asking anyone's help, including the IMF's," Kubilius said.

From 11 to 15 June, the International Monetary Fund (IMF) Mission, headed by Julie Kozack, a representative of the European Department of the IMF, have worked in Lithuania.

This Mission arrives to Lithuania once in each half of the year.