Press Release: Commission assesses convergence programmes of Denmark and Lithuania

On 19 February, 2008, the European Commission examined the updated convergence programmes of Denmark and Lithuania. The Danish programme envisaged a sound budgetary position throughout the 2007-2010 period with high, although declining, surpluses against the background of weakening cyclical conditions. Still, the medium-term objective (MTO) – a structural surplus between ¾% and 1¾% of GDP – will be fully respected over the programme period. Lithuania's programme aimed at fostering macroeconomic stability via a tighter fiscal policy stance. However, given persistent external and domestic pressures, an even tighter fiscal policy would be appropriate. The programme foresees only a gradual improvement of the structural balance towards the MTO – a structural deficit of 1% of GDP – through a back-loaded revenue-based adjustment. Moreover, the budgetary outcomes could be worse than projected in view of optimistic revenue projections and the absence of a binding medium-term budgetary framework. As regards the long-term sustainability of public finances, both Denmark and Lithuania remained at low risk.