Lithuania may delay
its euro-adoption

SWEDBANK: Lithuania may delay its euro-adoption goal beyond 2014 because the currency area’s debt crisis is worsening and its government lacks “political determination” before a parliamentary ballot.

Lithuania may be wary of providing aid to ailing euro-region members such as Greece, Swedbank economists Nerijus Maciulis and Lija Strasuna says in an e-mailed report. While it has a good chance of meeting entry criteria by next April, neighbouring Latvia has stronger political resolve to adopt the currency the following year, they write.

“There seems to be a more unanimous agreement to meet Maastricht criteria for the sake of stability, but not necessarily in order to adopt the euro immediately” in Lithuania, Swedbank says. “There’s a probability Lithuania won’t apply formally for euro adoption in 2014 -– much of this will depend on election results in October, as well as the euro area’s progress toward a sustainable solution.”

Latvia and Lithuania are likely to meet the Maastricht criteria in early 2013 and were both expected to join the euro zone in 2014.

Thus, by 2014, the two countries may be able to take full advantage of the benefits offered by the membership in Economic and Monetary Union, according to the Swedbank economists.

According to Chief Economist at Swedbank Nerijus Maciulis, Lithuanian politicians avoid making decisions and even discussing the subject because of the recent fall of the euro popularity and the public's trust in the future of the single currency.

However, the economist points out that the risk of the euro future is not high enough to forget a long-term strategic goal of Lithuania.

The passive attitude of the responsible Lithuanian authorities is also reflected in the survey of the Eurobarometer which reveals that 60% of residents in Lithuania say that they do not get enough information about the euro.

However, the study conducted by the European Commission shows that 44% of population support the euro adoption and 5% have not decided yet. Maciulis says that the euro benefits are tangible and easily measured.

"There seems to be a more unanimous agreement to meet Maastricht criteria for the sake of stability, but not necessarily in order to adopt the euro immediately" in Lithuania, Swedbank
economists Nerijus Maciulis and Lija Strasuna said in an e-mailed report.

Lithuania and Latvia are next in line to join the 17-nation Euro Area, while other Eastern European nations such as Poland and the Czech Republic show slow preparations as the debt crisis deepens.

In 2006, Lithuania became the only nation rejected for euro adoption after it missed an inflation target by 0.1 percentage point.

Estonia became the 17th member of the Euro Area in 2011.