January Euro Introduction to Further Boost Lithuania’s Investment Climate

– Baltic country will become the 19th member of the Eurozone (out of 28 EU member countries)
– Increased trade and investment activity expected between Germany and Lithuania

Lithuania will join the Eurozone on the 1st of January, 2015, to become the 19th member of the currency union. As a result, existing exchange rate risks and the cost of exchanging currency will disappear. The Baltic country hopes that adopting the Euro will facilitate increased investment and trade activity with both German and international entrepreneurs within Lithuania. With a portfolio of investments already valued at 1.04 billion Euros, Germany is one of Lithuania‘s most important investor countries. Around 1,200 German businesspeople currently enjoy corporate representation in Lithuania.

Improved credit rating and strong fundamentals

The ratings agencies Standard & Poor‘s and Fitch elevated Lithuania‘s credit rating to A- earlier this year. As a result, credit conditions for companies operating within Lithuania have improved significantly; lending rates have reached an all-time low. Lithuania thus hopes to gain the momentum necessary to consolidate its strong economic growth. Lithuania‘s GDP growth of 2.9% in 2014 places it among an elite group of countries within the EU that have demonstrated the highest level of economic dynamism. The World Bank acknowledged the staying power of Lithuania‘s economic stability in its “Doing Business Report 2015” by ranking the country in the top three central and eastern European countries. The criteria for this index include the absence of governmental barriers to entrepreneurial activities, the business environment, and investment requirements. Among the 28 EU member states, Lithuania ranks ninth overall.

In order to be accepted into the EU‘s monetary union, Lithuania was required to meet the euro convergence criteria. With a budget deficit of 2.6% of GDP, Lithuania successfully came in under the threshold of 3%, whilst its debt-to-GDP ratio of 39% was well under the 60% limit and far lower than the European average which at that time was 90.9%.

Read the full article in German at www.focus.de