| Author (Person) | Taylor, Simon |
|---|---|
| Series Title | European Voice |
| Series Details | Vol.12, No.18, 11.5.06 |
| Publication Date | 11/05/2006 |
| Content Type | News |
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By Simon Taylor Date: 11/05/06 Lithuania's hopes of joining the eurozone next year received a blow this week after the European Commission warned that its inflation rate would increase over the coming months. The Commission is to present a report next Tuesday (16 May) on whether Lithuania has met the four Maastricht criteria to qualify for eurozone membership in January 2007. Although Vilnius's inflation rate, at 2.7%, was only 0.07% above the 2.63% target, its chances of getting the green light were already very slim as the Commission, national governments and the European Central Bank (ECB) were insisting on very strict interpretation of the criteria. The Commission, in its spring economic forecasts on Monday (8 May), warned that average annual inflation in Lithuania could rise to 3.5% this year, due to a combination of higher prices for oil imports and high wage growth. Lithuania has been complaining that it is being unfairly treated because the Maastricht treaty setting out the rules for qualifying for the eurozone does not specify how exactly to calculate the target rate for inflation. The Commission argued that it should be calculated on the average of the three best-performing EU economies, (Poland, Sweden and Finland), only one of which is in the euro, plus 1.5%. Using the rates for the three eurozone members with the lowest rate would enable Vilnius to qualify. Lithuanian under-secretary for finance Rolandas Kris ciunas told European Voice that his country was being asked to "slow down its growth rate". Annual growth in Lithuania is expected to reach 6.5% this year while Slovenia, which is expected to hear from the Commission next week that it has met all the criteria for euro membership, has a growth rate of 4.3%. The ECB will present its own assessment of economic performance at the same time. The reports will be discussed by finance ministers at their next meeting on 7 June. EU leaders will also discuss admitting a new member at the summit on 15-16 June. The final decision will be taken by finance ministers on 11 July. At the meeting they will also decide the exchange rate at which the new member joins, although this is usually the current market rate. Article reports that Lithuania's hopes of joining the eurozone in 2007 received a blow after the European Commission warned in its spring economic forecasts, published on 8 May 2006, that the country's inflation rate would increase over the coming months. The Commission was to present a report on 16 May 2006 on whether Lithuania had met the four Maastricht criteria to qualify for eurozone membership in January 2007. |
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| Source Link | Link to Main Source http://www.european-voice.com/ |
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| Subject Categories | Economic and Financial Affairs |
| Countries / Regions | Lithuania |
