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Meeting of Finance Ministers’ of Estonia, Latvia and Lithuania

Date

2009 08 21

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Vilnius, August 21 Today the finance ministers Jürgen Ligi, Einars Repše and Ingrida Šimonytė met in Tallinn. The ministers focused on the economic situation and on the challenges the public finances of the three countries have to endure in the upcoming years.

The deep global economic slowdown and tensions in financial markets due to global financial crisis has substantially affected the Baltic economies. After a period of rapid economic growth, Lithuania, Latvia and Estonia have entered a recessionary phase. The economic downturn in the Baltic countries is characterised by similar challenges: the need to ensure sound fiscal position in order to avoid unsustainable debt accumulation, undertake measures to mitigate the consequences of the economic hardship and to maintain confidence in the financial sector.

The speed and scope of recent adjustment has put severe strain on the public finances of the three countries. Estonia, Latvia and Lithuania have in their quest for stabilising the public finances adhered to the similar set of measures - cutting budget expenditure, including the administrative budgets, and increasing taxes, mainly VAT and excises.

In the situation when the economy needs a revitalisation, it is very important to make efficient and effective use of the EU structural funds support. The impulse this additional resource can provide for the new growth phase should be utilised. The ministers welcome the European Commission’s initiatives to simplify the structural funds’ administration. Estonia, Lithuania and Latvia have already put in use the first set of simplified rules; the provision of the necessary co-financing is also the priority of the budgets.

Viable and credible financial sector has an important role in restarting the economy and re-establishing the trust in economy in general. The ministers welcome the EU’s steps to reform the EU financial supervision set up and will support the Swedish presidency’s efforts to find appropriate solutions.

The priority for the coming years is to restore the confidence in the sustainability of the public finances, therefore strengthening the foundations for the economic recovery in the Baltic states. Estonia, Latvia and Lithuania reiterate the aim to become members of the euro area at the first opportunity.

 

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