Lithuania May Delay Euro Switch as Election Nears, Swedbank Says

Lithuania may delay its euro-adoption goal beyond 2014 because the currency area’s debt crisis is worsening and its government lacks “political determination” before a parliamentary ballot, Swedbank AB (SWEDA) said.

The Baltic nation may be wary of providing aid to ailing euro-region members such as Greece, Swedbank economists Nerijus Maciulis and Lija Strasuna said today in an e-mailed report. While it has a good chance of meeting entry criteria by next April, neighboring Latvia has stronger political resolve to adopt the currency the following year, they wrote.

“There seems to be a more unanimous agreement to meet Maastricht criteria for the sake of stability, but not necessarily in order to adopt the euro immediately” in Lithuania, Swedbank said. “There’s a probability Lithuania won’t apply formally for euro adoption in 2014 -– much of this will depend on election results in October, as well as the euro area’s progress toward a sustainable solution.”

Lithuania and Latvia are next in line to join the 17-nation euro area, while other eastern European nations such as Poland and the Czech Republic slow preparations as the debt crisis deepens. In 2006, Lithuania became the only nation rejected for euro adoption after it missed an inflation target by 0.1 percentage point.

To contact the reporter on this story: Milda Seputyte in Vilnius at mseputyte@bloomberg.net

To contact the editor responsible for this story: Balazs Penz at bpenz@bloomberg.net

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