Bloomberg News

Lithuania Would Consider IMF Help If Global Markets Worsen

October 13, 2011

(Updates with loan estimate in fifth paragraph, Prime Minister in last.)

Oct. 13 (Bloomberg) -- Lithuanian Finance Minister Ingrida Simonyte said the government would consider turning to the International Monetary Fund if global financial-market conditions worsen.

IMF assistance has become “less sensitive politically” than in 2009, when Lithuania considered seeking a loan, as the Washington-based fund can now provide “more instruments than just a standby agreement,” including credit lines and insurance, Simonyte said. The Baltic nation doesn’t plan to approach the IMF at present, she added.

“We can’t say we’d rule out assistance” from the IMF “should such a need occur and uncertainty on international markets continue,” Simonyte told a conference today in the capital, Vilnius.

Europe’s sovereign-debt crisis and a weaker global economy have roiled markets, prompting investors to sell stocks and bonds in emerging nations. Lithuania’s government, which is expected to approve next year’s budget today with a deficit of 2.8 percent of gross domestic product, needs to refinance 5.5 billion litai ($2.19 billion) of debt next year.

Lithuania is “likely to turn to the IMF” to keep borrowing costs down in 2012, the Baltic News Service quoted Kestutis Glaveckas, head of the parliamentary budget committee, as saying today. Lithuania may borrow 3 billion to 4 billion litai from the IMF at an interest rate of about 3 percent in January or February, Glaveckas estimated, according to BNS.

Officials should consider IMF loans next year as they offer lower rates than the market, Stasys Kropas, head of the country’s Banking Association, told the same conference.

The government will borrow on the markets “if costs will be reasonable,” Prime Minister Andrius Kubilius told journalists in response to a question on potential IMF assistance.

--Editors: Andrew Langley, Alan Crosby, Paul Abelsky

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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