President Dalia Grybauskaitė

Europe’s new treaty – obligation to deal with finances in responsible manner

Monday, January 30, Brussels - The leaders of the EU member states, currently attending an informal meeting of members of the European Council in the capital of Belgium, approved the Fiscal Compact Treaty designed to obligate the eurozone members to observe stringent fiscal discipline and pursue a responsible economic policy. All of the EU member states, except United Kingdom and Czech Republic, agreed to join the treaty.

President Dalia Grybauskaitė, participating in the EU summit, underlined that Lithuania would accede to this treaty because it is in the interest of the country's economy and will help to prevent financial populism and irresponsible economic policy. Such position of Lithuania is approved by the Government and the Seimas' Committees on European and Foreign Affairs.

"Lithuania is already implementing stringent fiscal discipline measures. Our accession to the treaty will serve to consolidate our position and will curb the way to irresponsible decisions and financial populism. Regardless of which political party is in power, it will be obliged to deal with the country's finances in responsible manner," the President said.

The treaty prescribes that a state budget should be balanced or surplus. The annual structural budget deficit may not exceed 0.5 percent of the nominal gross domestic product (GDP). The countries acceding to this treaty will have to transpose this provision as binding into their national legislation, preferably on constitutional level, within one year after the treaty comes into force.

Some technical provisions of the fiscal compact treaty will be implemented by Lithuania only after introduction of the euro, when it becomes a full-fledged member of the Economic and Monetary Union. 

According to the President, implementation of the provisions of the treaty will save European countries from insolvency problems in the future. This is a serious signal for international financial markets that the European Union takes the necessary action to ensure stability, making easier for eurozone countries in financial hardship to borrow on these markets, she said. 

As Dalia Grybauskaitė stressed, it is not enough to have saving measures and strict fiscal discipline in place to end the crisis, therefore the agenda of the European Council meeting also included the discussion of the measures aimed to boost economic growth. The heads of state or government of the EU countries named as key priorities the improvement of business environment, financial aid to small and medium-sized enterprises, the single market, including the interconnections needed to form the EU internal energy market, and the promotion of employment, in particular as regards youth employment. The EU member states pledged to elaborate, within the framework of their national reform programmes, the action plan to combat unemployment.
Press Service of the President

Last updated 2012.01.30 22:34