According to the Finance Minister, the country's main difficulty is maintaining its balance in the face of joining the EU.
Lithuania must face various restrictions and cuts to complete the process of adjusting to European regulations, although the outlook is optimistic, given the good economic results of recent years.
– What have been the most important changes in Lithuania's financial system over the past ten years?
Over the past ten years, Lithuania has privatized all of its financial services. We had some state-owned banks and public investment banks, but they've all been sold off; the last one was last year. This means that the current competition is greater and private.
So, from this perspective, everything aligns with the EU, and we have also adapted to international institutions. We are involved in the Lisbon process, especially on financial matters, supporting its ideas and systems.
Recently, we have carried out the latest tax reforms, including income tax and VAT, all to align ourselves with the EU system.
– What is the percentage of foreign capital in Lithuania?
About 80%. A few years ago, the leading country was the United States, but now the most important investors are the Nordic countries and Germany.
Dalia Grybauskaite, Minister of Finance of Lithuania.
– What was the most contentious financial chapter in the negotiations with the EU?
There are no financial chapters, only some episodes for which we are responsible, such as the free movement of capital and the sale of land to private entities. This was not permitted under our Constitution, and we are currently changing that.
We have no problems with financial services; our biggest challenge will be maintaining the balance that Lithuania will need to contribute from day one of joining the European Union. Capital flows will return as structural funds, especially in agricultural transfers, which typically arrive a year later. So we face certain constraints and tensions, and of course, an imbalance that could force us to make some difficult decisions regarding social spending cuts or an increased deficit, but for now, we continue negotiating.
– How is Lithuania dealing with its national debt?
We have a 28% debt-to-GDP ratio, which we primarily manage with loans, yet our deficit remains at 1,9% of GDP. We obtain loans both domestically and internationally. Significant development is taking place in domestic markets and in the government bond market. Lithuanian indices are quite strong, and this year we sold ten-year bonds at very competitive prices, only 94% above German bond yields.
– What is the relationship between the Ministry of Economy and the Ministry of Finance?
The Ministry of Finance has become a strategic ministry in Lithuania due to our responsibility for macroeconomic policy. We are responsible for the Treasury and debt servicing, which are also included in the functions of this ministry.
– How would you describe the employment situation in your country? And what can you tell us about the fact that so many people work in agriculture?
Only 12% of the workforce is employed in agriculture. We have a large number of families who live in rural areas, but they only live there.
The greatest unemployment is not in agriculture. Because we are restructuring our economy so rapidly, and also because of the privatization process, many businesses are disappearing.
Our figures for last year are excellent, except for unemployment. At the Ministry of Economy and the Ministry of Social Security, we are implementing programs aimed at the unemployed, allocating special funds to address this issue.
– What is the relationship with the Spanish Government?
I must say that it is not a very close relationship, but at this time of negotiations with the European Union, we are in more contact, through negotiation teams in the chapters of finance and agriculture and on the issues of subsidies, which are also very important for Spain.
Overall, our political and economic relations are satisfactory. We have less contact with Southern Europe and the Baltic countries. Our main partners are Germany and the Nordic countries, and our relations are very natural. I believe that regional cooperation will be possible again in the future of the European Union. For now, we have some agreements with Spain that are the foundation for a closer relationship.
– What is your opinion on the Spanish Presidency?
It was very effective. I attended several meetings on financial matters and witnessed firsthand how its President is a firm leader, as he has demonstrated both in his own country and during his European Presidency.
Leadership must be present not only within the country itself, but also on the international stage. Weak leadership achieves nothing, and their President is quite strong.
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