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Lithuania Banking on Budget to Seal Second Bid for Euro

Nov. 21 (Bloomberg) -- Lithuania, which in 2006 became the only candidate to be rejected from adopting the euro, stands a better chance this time round as the outlook for its public finances improves, according to President Dalia Grybauskaite.

The Baltic country, which wants to make the currency switch in 2015, will narrow its fiscal shortfall in the next two years, bolstering the chance it will meet Maastricht criteria on sustainability, Grybauskaite said yesterday in an interview.

“Both our forecasts and European Commission estimates show sustainable growth and sustainability in budget-deficit reduction in 2014 through 2015,” Grybauskaite said in the capital, Vilnius. “It’s highly likely” the nation of 3 million people will become the 19th euro-area member in 2015, she said.

Lithuania, which wants to follow Latvia and Estonia into the euro, missed out on adopting the common currency seven years ago because consumer-price growth was too fast. As well as inflation, candidates must meet targets for budget deficits, debt, long-term interest rates, exchange-rate stability and sustainability, which ensures nations comply with convergence limits in the years after euro adoption.

Lithuania’s budget gap will narrow to 2.5 percent of economic output next year and 1.9 percent in 2015, European Commission estimates show. This year’s budget gap is forecast at 3 percent, the highest allowed for euro adoption.

Estonia joined the currency bloc in 2011, while Latvia is set to become its 18th member on Jan. 1.

To contact the reporters on this story: Milda Seputyte in Vilnius at mseputyte@bloomberg.net; Bryan Bradley in Vilnius at bbradley13@bloomberg.net

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

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