European Commission: Lithuania Has Taken Effective Action

On January 27 the European Commission assessed the action taken by Lithuania, Malta, Latvia and Hungary in response to recommendations proposed by the Commission and endorsed by the Council in July 2009 in respect to the correction of their respective budget deficits. The Commission concluded that effective action has been taken by the Government of Lithuania in response to the July recommendations.

However, in the opinion of the Commission, the contraction in Lithuania’s economic activity in 2009 turned out to be much deeper than projected last spring and the increase in last year's deficit was bigger than expected, in spite of significant consolidation measures. Therefore, the Commission recommends a revised deadline of 2012 for the correction of the excessive deficit, in line with the authorities' fiscal consolidation objectives and the stability benefits implicit in the anchoring of the economy to a medium-term euro entry prospect. The correction of the excessive deficit by the new deadline would represent an average annual fiscal effort of 2¼% of GDP between 2010 and 2012.

The Commission proposed to extend the deadline by one year to 2011 for the correction in the case of Malta as well. As to Hungary and Latvia, the Commission concluded that they had complied with the Council recommendations but they will need to pursue the efforts to bring their deficits below 3% by the agreed deadlines of respectively 2011 and 2012.

The Commission will assess whether Romania and Poland, the two other countries for which the Council adopted recommendations in July 2009, have taken effective action in the coming weeks.